Fund-management partnership

Hey there, time traveller!
This article was published 19/03/2018 (2221 days ago), so information in it may no longer be current.

Even though disruptive technologies such as artificial intelligence and autonomous vehicles seem to dominate the pages of the business press these days, for the average investors — and even for the institutional ones — it is an investment type that often seems fraught with uncertainty and risk.

That is why one-year-old Winnipeg money-management firm Wellington-Altus Private Wealth believes it has pulled off a major coup by securing exclusive Canadian rights to a New York money-management firm that specializes in the field to manage a separate account product for its clients.

ARK Investment Management LLC may not be the only money manager focused entirely on disruptive technologies — such as robotics, 3D printing, big data, machine learning, blockchain technology, cloud computing, energy storage and DNA sequencing — but it is quickly building an industry-leading track record.

Charlie Spiring, founder and CEO of Wellington-Altus, said the addition of ARK will mean his clients can choose to have separate accounts established that would be managed by ARK and run by industry veteran Catherine Wood.

“In Canada, we are not very good and the country has been underexposed and under-researched (when it comes to investing in disruptive technologies), and we are not getting it,” Spiring said. “We look for smart money managers in Canada and around the world, and then we met Cathy and her magnificently disruptive shop in New York. She is a real rock star.”

ARK is only four years old, but has already achieved industry-leading results in four ETFs (exchange-traded funds) that it sponsors. According to Bloomberg, two of them were recognized for their performance in 2017 delivering year-to-date returns of more than 70 per cent.

In an interview at Wellington-Altus’s Winnipeg head office, Wood said her firm will only partner with others who have the right level of understanding of the opportunities and challenges.

“When I met Charlie, I could tell we have the same DNA,” she said, referring to the goals and aspirations of Spiring’s firm, which has rocketed out of the gate and now has $3.5 billion in assets under management in less than a year in business.

ARK is being courted by some of the top wealth-management firms in the world. For instance, in November it joined up with the Japanese firm Nikko Asset Management and Morgan Stanley Wealth Management to offer the same disruptive-innovation, separately managed-account product to Morgan Stanley Wealth’s Australian clients.

As a registered investment adviser, ARK must hold publicly traded securities, as opposed to private equity. Wood’s investment style means ARK’s investments are as different from an index fund as can be.

“The major stock market indexes will have traditional industries and companies,” she said. “Our holdings are not traditional. They are tying to disrupt the existing world order.”

For instance, among ARK’s top holdings are Tesla, Bitcoin Investment Trust and Illumina Inc., a company that manufactures and markets integrated systems for the analysis of genetic variation and biological function.

She defines disruptive technologies as technologically enabled change or innovation that is going to change the way the world works and make it a better place.

In her estimation, there are currently five innovation platforms emerging at the same time — automation, energy storage, DNA sequencing, next-generation internet and blockchain technology — something that has not happened since the late 1800s, when there were three: electricity, the telephone and the internal-combustion engine.

“We founded the company to focus only on disruptive innovation because there is something happening today that has never happened before: five innovation platforms evolving at the same time,” she said. “We are seeing incredible opportunities in the public equity markets, and we don’t think they are well-understood. Most public equity analysts and investors are short-term in their time horizon. If you are willing to look out five to 10 years, we can see huge business opportunities in, for instance, autonomous taxi networks.”

For one thing, ARK’s research points out, in less than five years, autonomous electric vehicles will be able to cut vehicle point-to-point travel costs in half, and by 2022, electric vehicles will be less expensive than gas-fuelled ones.

Depending on the client, Spiring said, Wellington-Altus might carve out 10 to 15 per cent of a client’s funds to be managed in a separate account by ARK.

“Not everyone will be at 15 per cent,” he said. “My mom might be at three per cent. Our job is to make sure our clients are comfortable. We have to see where it fits into the program.”

martin.cash@freepress.mb.ca