The ARKG ETF: Genomic Focus with a Twist

The ARK Genomic Revolution Multi-Sector Fund ( ARKG ) is obviously positioned as a genomics fund, but as an actively managed exchange traded fund, it can venture into other growth areas in the healthcare sector. That includes telemedicine, as highlighted by the fund’s significant exposure to Teledoc .

Source: The ARKG ETF: Genomic Focus with a Twist

ARKG includes companies that merge healthcare with technology to capitalize on the revolution in genomic sequencing. These companies try to better understand how biological information is collected, processed, and applied by reducing guesswork and enhancing precision, restructuring health care, agriculture, and pharmaceuticals in the process.

In a recent note, “Piper Sandler analyst Sean Wieland analyzed downloads of the Livongo mobile-phone app, a health-monitoring service from Livongo, which Teladoc acquired in the fall for $18.5 billion,” reports Josh Nathan-Kazis for Barron’s. “Wieland wrote that there were 80,700 downloads of the app in the first quarter of 2021, down 25% compared with the first quarter of 2020.”

ARKG’s primary focus is to seek long-term growth of capital via active management. The fund invests primarily in domestic and foreign equity securities of companies across multiple sectors, including healthcare, information technology, materials, energy, and consumer discretionary.

Covid-19 boosted telemedicine. A large segment of the global population is under stay-at-home orders. Increased demand from technology-based tools that facilitate remote communication with doctors and enable patient monitoring became critical.

Some U.S. healthcare providers report that telehealth visits, defined as consultations in which a patient connects with a doctor via voice or video chat, increased by as much as 175x since the pandemic began. The strain the epidemic put on all aspects of the global health care system highlighted broader opportunities to modernize health care by more effectively leveraging technology and digitization.

“Wieland said that he expects $568 million in 2021 revenue for Livongo alone, just above the $567 million Teladoc has said it expects Livongo to earn in 2021,” adds Barron’s. “He said that it was still possible that Livongo could beat expectations.”

The OECD estimates that $1.3 trillion, or 20% of annual healthcare expenditures in OECD countries, comes from systemic inefficiencies that include administrative complexities, pricing failure, redundancies, and fraud. Increased connectivity makes the delivery of virtual health services possible. Today, there are 4.6 billion active internet users globally. The FCC’s July 2020 commitment of $200M to improve rural telehealth infrastructure should prove to be a tailwind to these services, as should broader rollouts of high-speed internet and 5G technology.

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