Growth Opportunities

This has been an amazing year for growth stocks, especially technology-related. One of the ETFs that has gained a lot of attention is ARK Innovation ETF (ARKK). ARK defines ‘‘disruptive innovation’’ as the introduction of a technologically enabled new product or service that potentially changes the way the world works. The portfolio includes very high beta technology stocks like Tesla, Square, Crispr, Teledoc etc. The founding partner is Catherine Wood who has a great track record with twelve years at AllianceBernstein as CIO of Global Thematic Strategies where she managed over $5 billion. So far, the ETF has performed very well. For mutual fund investors who are looking at high beta growth, there are 2 funds that could potentially make sense. Morgan Stanley Insight (CPOAX) and Baron Opportunity (BIOPX). Both of these are no transaction fee funds at Fidelity and Schwab. Morgan Stanley Insight (CPOAX) is a $6B fund with Dennis Lynch as its lead fund manager since October 30, 2002. Baron Opportunity (BIOPX) is a $1B fund with Michael Lippert as its lead fund manager since March 2, 2006. Both of them have a reasonable long management history in fund management to make an accountable performance contribution. Portfolio wise, both of these funds are technology focused. Morgan Stanley Insight (CPOAX) has Shopify, Zoom, Spotify, Coupa, Amazon as its top holdings. Baron Opportunity (BIOPX) has Microsoft, Google, Tesla, Facebook, Amazon as its top fund holdings. Even though the top holdings are different, these two funds has 0.92 correlation with each other,so holding one might be enough.

When we compare the performance, all of these have great performance in the last 5 years. Below are the numbers from Jan 2015 to Oct 2020. For technology driven themes, these funds could be worthwhile to be on your watch list.

 CAGRBest YearWorst YearMax. DrawdownSharpe RatioSortino Ratio
CPOAX27.42% 79.83%-3.90%-17.44% 1.22.46
BIOPX21.65% 52.91%-4.84%-19.33% 1.11.98
ARKK31.00% 87.34%-2.00%-22.77% 1.051.92
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