Are you worried about growing volatility in 2017? Wondering which companies will benefit if tax reform happens? Struggling to figure out an infrastructure play for your portfolio?
Now could be a good time to look up from those near-term issues and consider how a bigger-picture, future-oriented outlook might benefit your portfolio. Consider how innovation is transforming industries and creating new ones—and the ways investors can tap into those themes.
“No sector is safe from innovation,” says Catherine D. Wood, founder and chief executive officer of ARK. At ARK, analysts focus on the ways in which technologically enabled innovation will potentially intersect every aspect of business life, Wood says.
Intersect—and likely improve it, she adds.
“These innovation platforms are going to potentially change the way the world works and, we do believe, make the world a better place.”
For investors eager to allocate a portion of their portfolio to harness these long-term trends, consider the following five innovation themes:
Think Bitcoin, but not so much the cryptocurrency as the technology that undergirds that currency. This technology potentially will lead to the creation of new businesses, Wood says, but even before that happens the cost structure should collapse in many inefficient industries, including financial services and the government sector. The health care industry is another example. Currently, health care suffers mightily because of a lack of interoperability, Wood says.
“You have to go out to the doctor’s office and fill out the form every single time.” We think blockchain technology will connect insurance companies, doctors, hospitals and patients—entirely securely with private keys that allow each entity to access a piece of the blockchain, also known as the distributed ledger. The ledger itself never changes.
“It’s immutable,” Wood says, thus providing a system that is highly secure yet allows for interoperability and privacy.” ARK embraces this theme through its investment in Grayscale’s Bitcoin Investment Trust (GBTC) via its ARK Web x.0 ETF (ARKW) and ARK’s overall Disruptive Innovation ETF (ARKK).