Investing

Destiny100 vs. ARKK: Which High-Tech ETF Has What it Takes to Surge Higher in 2025?

Joey Frenette

Published: December 2, 2024 3:54 pm

The risk-taking appetite on Wall Street has kicked up a notch since Donald Trump’s presidential win. Whether we’re talking about the high hopes for high-tech deregulation in 2025 or the extension (maybe acceleration) of the artificial intelligence (AI) boom, investors certainly seem enthused to punch their ticket to growth at close to all-time highs. With big banks raising their S&P 500 price targets (Deutsche Bank sees the index hitting 7,000 by the end of next year), it’s hard not to be more optimistic as Trump heads into the first year of his second term.

Indeed, President-elect Trump has been hard at work announcing new cabinet members in the weeks following his victory. With Elon Musk (and Vivek Ramaswamy) leading the newly-formed Department of Government Efficiency (DOGE), it’s no mystery as to why tech investors are willing to pile back into Tesla (NASDAQ:TSLA) and the tech trade as a whole.

Indeed, it’s tough to tell how much of the Trump trade is priced in as we head into the holidays. Regardless, the stage seems set for a Santa rally in 2025. Whether tech leads such a rally, though, remains the big question. In any case, here are two heated high-tech plays that may be worth watching as Trump policies, lower interest rates, and AI enthusiasm act as potentially potent drivers over the medium term.

Key Points About This Article

• The red-hot high-tech ETFs are starting to gain traction post-election.
• The DXYZ and ARKK are some of the explosive movers worth watching as Trump sets an upbeat tone for tech.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Destiny100

The Destiny Tech100 (NYSE:DXYZ) ETF exploded higher earlier this year in the weeks that followed its public market debut. The intriguing ETF allowed the retail crowd a simple way to bet on Elon Musk’s SpaceX (the largest holding) alongside a slew of other exciting, high-tech private firms.

OpenAI, Stripe, Discord, and Epic Games are just some of the names that investors would get a piece of with the DXYZ. In any case, the initial multi-bagger boom followed a massive bust, as investors became less willing to pay such a lofty premium to net asset value (NAV). Sure, the DXYZ ETF was one of the only games in town to bet big on Elon Musk’s SpaceX, but the price of admission quickly grew out of hand.

More recently, the DXYZ re-awoke after hibernating since spring. Over the past month, the stock rocketed more than 239%. Indeed, it was Trump’s presidential victory and the fund’s SpaceX exposure that kicked off the latest rally in the closed-end ETF.

Though I’m impressed by the holdings underneath the hood, I’m staying away from the name at nearly $40 per share. Why? I’m unwilling to pay almost eight times more than NAV, which is reportedly $5.15 per share.

That said, until SpaceX goes public (Elon doesn’t seem to have plans to take the firm public at this time) or another similar fund hits the market, the DXYZ may be the only game in town for the many Musk fans who just have to have exposure to Musk’s space company.

In any case, just because the price of admission is higher doesn’t mean DXYZ shares can’t double up again in a short duration. It’s a hot ETF, but perhaps not hot enough for traders to keep piling into going into the holidays.

Ark Innovation Fund

Cathie Wood’s Ark Innovation Fund (NYSEARCA:ARKK) has also been heating up of late, surging 17% in the past month. As impressive as the past month’s move has been, the gain is dwarfed by DXYZ’s unprecedented spike. Either way, I do see ARKK as the safer bet as Wood looks to place contrarian bets on a slew of publicly traded tech innovators, many of which she’s inclined to buy shares of on weakness.

Indeed, Cathie Wood isn’t afraid to buy dips. And if the appetite for risk and growth increases further, perhaps Wood’s ETFs will go from trailing the market to beating it again.

In any case, the ARKK is a spicy ETF that investors should be careful with. Even Wood said she has a “volatile fund” and that it “should not be a huge slice of any portfolio” in a recent sit down with CNBC interviewers. She’s absolutely right. Sprinkling some ARKK on any portfolio can add some spice. But it’s up to investors to judge how much spice they add to their dish without making it too hot to handle.

The bottom line

If I had to choose between the DXYZ and ARKK, I’d have to go with the latter. Cathie Wood seems to be a growth investor who’s also focused on scoring a decent value from every buy she makes. That said, I wouldn’t be too shocked if shares of both ETFs were to trend higher going into 2025.