Jan 6, 2023
Happy Saturday! Here are the top questions from Ask Titan Anything this week. As always, let us know if you have any questions.
Q: How is the Ark Venture Fund different from the ARKK ETF?
The ARK Venture fund, launched as a first-time fund on Titan in September, is distinct from the other existing ETFs managed by ARK in a number of meaningful ways. Firstly, the ARK Venture Fund will invest primarily in early to late stage private companies, with only ~20% of the portfolio in publicly traded companies. An ETF, on the other hand, is limited to public securities. As a result, the funds are also structured differently. As opposed to an ETF which offers daily liquidity and is listed on an exchange, the ARK Venture Fund is structured as a closed-end interval fund and offers clients only partial liquidity through quarterly redemptions. The potential upside of this feature is called the “illiquidity premium,” i.e. the extra compensation investors may receive for having their money less accessible. Similar to the ARKK ETF, the ARK Venture Fund will also be focused on the theme of disruptive innovation. The team believes bringing this focus to the private markets is a natural evolution and opportunity for retail investors to take part in the value creation and potential investment returns within private markets.
Q: I read through Apollo's real estate update - super interesting. Is now a good time to be adding more capital?
The answer to your question really comes down to time horizon. To the extent that time horizon remains long, we believe that alternative asset classes like real estate are a great diversifying piece to your portfolio. The active component of the Apollo offering allows the team to be incredibly nimble and allocate capital efficiently. The fund is a bit more insulated from the headlines you might be seeing in the news when it comes to residential real estate trends and the Apollo team believes that their focus on multifamily and industrial investments in key geographies will prove beneficial. It truly does come down to time horizon though - if you're looking to allocate capital over the next 5+ years, the Apollo RE offering is a historically strong inflation hedge that has the potential to provide stability amidst severe public market fragility.
Q: Are you considering adding McDonalds to Flagship? It seems like a nice recession hedge to me.
Shares of McDonald's (MCD) crushed the market in 2022. The stock is barely down for the year and while there are a number of factors contributing to the stock's solid performance, one helpful factor is the company's dividend in combination with a very healthy business. Its cash payout, which has helped shareholders achieve nearly a 5% total return after adding in the dividends paid, offers investors some reassurance during a tough market. The business itself is very healthy too - first-quarter comparable-store sales increased 10% year-over-year across all segments, with U.S. comps increasing more than 6% year-over-year. The company's operating-income momentum, analysts' forecast for meaningful EPS growth in the years to come, the impressive dividend history, and a decent yield combine to make the fast-food company a potentially great option in an uncertain environment.
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