Zillow – Fund Manager Ryan Jacob Takes On Cathie Wood’s ARK Funds With New ETF
As ARK Invest’s Cathie Wood has demonstrated, there’s tremendous investor appetite for actively managed exchange-traded funds focused on technology stocks. There’s also plenty of room for competition.
The fund manager Ryan Jacob is getting ready to jump into the fray. His firm, Jacob Asset Management, has been investing in tech stocks for more than 20 years, infamously launching his flagship
fund (ticker: JAMFX) at the height of the internet bubble in 1999.
The firm now has three open-end funds, all performing well. Jacob Internet is up about 21% this year, adding to a 123% gain in 2020.
(JMCGX) which focuses on micro-cap stocks, has returned 25% this year, after a 74% gain last year. And
Jacob Small Cap
(JSCGX) has appreciated 14% this year, following a 67% increase in 2020.
On Wednesday, Jacob enters the ETF market with the launch of Jacob Forward (JFWD), which he says will include the best ideas from all three of the other funds, focusing on early-stage growth stocks. Jacob expects the portfolio to be about two-thirds tech, one-third healthcare.
In an interview with Barron’s, Jacob said he has multiple reasons for entering the ETF market. For one thing, he says, the strong performance of the open-end funds has spurred interest from investors outside the country who can’t buy regular U.S. mutual funds.
“We’ve had inbound interest from overseas investors and we don’t have a product for them,” he says.
Jacob also notes that due to their relatively small size, his open-end funds have high expense ratios—in the 2% range—which deters some investors. The ETF’s fee structure will be lower—75 basis points. And he notes that many investment advisors prefer ETFs, given their lower fees and greater liquidity.
Jacob thinks the new ETF could be an attractive alternative to the ARK funds, which have accumulated a huge asset base but lately have underperformed the market. The $25 billion flagship
ETF (ARKK) is flat year to date, while the
is up 15%. The
ARK Next Generation Internet
ETF (ARKW) is up 1.7% year to date.
You can get a pretty good idea of where the new ETF will be invested by looking at the recent holdings of the three current Jacob funds. As of June 30, the largest holding in all three funds is
(OPRX), which uses ads, coupons, messaging, and loyalty cards to drive patient compliance with prescriptions. Another common holding is
(VYGDF), a New York-based, Canadian-listed cryptocurrency exchange. Among other things, Voyager makes a market in Dogecoin.
More familiar names in the Jacob Internet fund’s top 10 include
Write to Eric J. Savitz at [email protected]