AXS Investments has launched a pair of new ETFs offering tactical plays on the popular investment themes of disruptive technology and Chinese internet stocks.
Greg Bassuk, CEO of AXS Investments.
The AXS 2X Innovation ETF (TARK US) and AXS Short China Internet ETF (SWEB US) have been listed on Nasdaq with expense ratios of 1.15% and 0.95%, respectively.
Disruptive technology
TARK delivers twice (200%) the daily performance of the $12.1 billion ARK Innovation ETF (ARKK US), the flagship fund of technology investing specialists ARK Invest.
ARKK, which is actively managed by prominent stock picker Cathie Wood, ARK’s founder, CEO, and CIO, invests in up to 50 US-listed equities, including American Depository Receipts, of companies exhibiting ‘disruptive innovation’, defined as the introduction of technologically enabled new products and services that can potentially change the way the world works.
Eligible sub-themes include areas such as DNA technologies, automation & robotics, energy storage, artificial intelligence, the future of the internet, and fintech innovation.
TARK is designed to serve as a tactical tool for investors who wish to express a bullish view on the growth of these disruptive technologies.
ARKK has, however, had a dismal start to the year, racking up a loss of 51.8%, as of 6 May. Growth stocks have rotated firmly out of favour amid a broader equity market retreat and the Federal Reserve’s embarkation on tightening monetary policy. The fund’s concentration in certain stocks which have performed particularly badly has also contributed to its poor showing.
However, according to Greg Bassuk, CEO of AXS Investments, the rapid dip in performance may have set the stage for a bounceback in some of these stocks.
Bassuk said: “Recent market conditions have created what we view as a very compelling entry point for high conviction investors who believe in the value of innovation. We are excited to offer TARK as an easily accessible leveraged exposure to these companies.”
China internet
SWEB, meanwhile, delivers the inverse (-100%) daily performance of the KraneShares CSI China Internet ETF (KWEB US), a $5.4bn fund from China ETF specialists KraneShares.
KWEB is linked to the CSI Overseas China Internet Index which includes US and Hong Kong-listed Chinese companies with significant internet-related business activities in segments such as software & services, home entertainment, retail, and mobile.
KWEB’s performance has suffered greatly over the past year – the fund is down a massive 72.9% from its high on 17 February 2021, the consequence of a broad regulatory crackdown intended to boost social equality as well as central government control over leading tech firms.
Bassuk added: “We believe offering inverse exposure to China’s internet sector creates an opportunity for those investors who foresee a continuation of the market and geopolitical headwinds that are currently confronting Chinese technology and internet-related companies.”
Whether KWEB will continue its decline remains to be seen. The ETF is actually slightly up off its recent low in mid-March, a sign that investors may be expecting the Chinese government to reverse course and do more to support markets and restore China’s high growth rate which has slowed in recent years due to weakening domestic and export demand, the trade war with the US, and strict Covid-19 lockdowns.