This Tech-Focused ARK Invest ETF Is Up Around 36% This Year. Is It Still a Good Buy?

Investing in up-and-coming tech companies can be a great way to give your portfolio exposure to some promising growth stocks. The challenge, however, is in picking the right growth stocks, since not all of them will be successful, and they come with varying levels of risk.

Putting money into an exchange-traded fund (ETF) can help to spread out that risk so that you're not dependent on just a couple of stocks. At the same time, you can get a broader and more diverse position in tech by going with a diversified portfolio.

One ETF that focuses on tech stocks that has been red hot this year is the ARK Autonomous Technology & Robotics ETF (NYSEMKT: ARKQ). Here's a closer look at what makes this ETF special, why it's been doing so well, and if it's still a good buy.

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What you need to know about the ETF

The ARK Autonomous Technology & Robotics ETF has about $1.8 billion in net assets, and it normally contains around 30 to 50 stocks. These are companies that can benefit from tech advancements and automation. It's a forward-looking fund that seeks to capitalize on emerging opportunities.

It isn't an overly diverse fund, nor is it a terribly cheap one -- its expense ratio of 0.75% is on the high side. In exchange for its carefully selected stocks, you'll have to pay a bit more in fees for this ETF than you would for many other funds.

Currently, its top five holdings are Tesla (12.2%), Teradyne (9.4%), Kratos Defense & Security Solutions (7.3%), Palantir Technologies (6.2%), and Advanced Micro Devices (5.2%). North American companies account for the lion's share of the fund's holdings at 91%. And the median market cap is $38 billion.

Why the ARK fund has been doing so well this year

As of market close on Nov. 17, the ETF's returns for 2025 were an impressive 36%. By comparison, the S&P 500 is up by just 13%. The reason for the fund's success is not surprising when you consider how well some of its top holdings have performed. These are the year-to-date performances of the five largest positions it has (as of Nov. 17):

• Kratos: 166%
• Palantir: 126%
• Advanced Micro Devices: 99%
• Teradyne: 33%
• Tesla: 1%

Tesla is its largest holding, but it hasn't been doing terribly well this year. Instead, stocks such as Kratos and Palantir, which benefit from an increase in government spending on defense, have more than doubled in value.

When a fund's top holdings are doing so well, that can have a significant impact on how the ETF does. In the case of this ARK fund, Kratos and Palantir account for more than 13% of its holdings. And if you include Advanced Micro Devices, that means about 19% of the stocks it's holding have roughly doubled (or done better) this year.

Is this ETF still a good investment?

The ARK ETF is on track to generate a return of more than 30% for a third consecutive year. With the market being bullish on artificial intelligence, automation, and robotics, the fund has thrived and been a popular option for growth investors. The danger is that with valuations being high in tech these days, there is some vulnerability here.

In 2022, when the market crashed, tech stocks suffered significant declines. That year, the S&P 500 fell by 19%, but this ARK fund crashed an incredible 47%. It's a risk that you need to be aware of and comfortable with, knowing that in a downturn or widespread tech sell-off, there could be some significant losses, particularly since the ARK Autonomous Technology & Robotics ETF isn't overly diversified.

Given how hot it has been over the past few years and how high valuations are for stocks, I would hold off on investing in the fund today. The ETF recently hit an all-time high, and in recent weeks, it's been sliding lower amid broader weakness in tech. Unless you're willing to take on the risk and are planning to hold the fund for several years, you may want to take a wait-and-see approach.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Palantir Technologies, and Tesla. The Motley Fool recommends Teradyne. The Motley Fool has a disclosure policy.