ETF Central

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>>> The Best 3D Printing ETF

Interested in 3D printing stocks? You might consider investing in the 3D Printing ETF.

6-22-17

Motley Fool

Beth McKenna


https://www.fool.com/investing/2017/06/22/the-best-3d-printing-etf.aspx


3D printing stocks are having a great 2017, after several very tough years. The stocks of the two largest players, 3D Systems (NYSE:DDD) and Stratasys (NASDAQ:SSYS), for example, have gained 66.3% and 66.6%, respectively, this year through June 19, versus the S&P 500's 10.7% return.

Investors who are interested in 3D printing stocks but don't want to bet on just one player or even a couple of companies, have another option: a 3D-printing exchange-traded fund (ETF). We're going to explore the best (and only, to my knowledge) ETF focused on this space, The 3D Printing ETF (NYSEMKT:PRNT), to see if it's worth investing in.

The 3D Printing ETF, issued by Ark Investment Management, is an index-based fund designed to track the Total 3D-Printing Index. This index is composed of stocks of companies based in the United States and other developed markets that are engaged in 3D printing-related businesses, specifically, 3D-printing hardware, computer-aided design software and 3D-printing simulation software, 3D-printing service centers, scanning and measurement equipment, and 3D-printing materials.

The ETF, which is rebalanced quarterly, has 42 holdings. The weighted-average market cap of the portfolio is $30 billion, while the median market cap is $3 billion. The fund's expense ratio is 0.66%, which is fairly reasonable.

The 3D Printing ETF: Top 10 holdings
Holding No.

Company

Ticker

Market Cap

Country

Weight (% of Portfolio)

1

3D Systems

DDD

$2.5 billion
U.S.

7.08%
2

ExOne

NASDAQ: XONE $209.4 million
U.S.

6.59%
3

MGI Digital Graphic Technology*

ALMDG*

$300 million
France

6.39%
4

Stratasys

SSYS

$1.5 billion
Israel/U.S.

5.60%
5

SLM Solutions**

AM3D**

$700.1 million
Germany

5.36%
6

K2M Group Holdings

NASDAQ: KTWO

$991.1 million
U.S.

5.35%
7

Organovo Holdings

NASDAQ: ONVO

$276.1 million U.S. 4.77%
8

HP Inc.

NYSE: HPQ

$29.9 billion U.S. 4.46%
9

Autodesk

NASDAQ: ADSK

$23.2 billion U.S. 3.93%
10

Trimble

NASDAQ: TRMB

$9.5 billion
U.S.

3.91%

Investors should be clear that this ETF is not a pure play on 3D printing. I've read such a claim on several financial outlets, and it just isn't so. A quick glance at the top 10 holdings should make this obvious: No. 8, HP Inc., for example, is a well-known huge player in 2D printing, with 3D printing no doubt comprising a minuscule part of its business, as it entered the market just last year.

Of the top 10 holdings, only three are 3D printing pure plays, in my opinion: 3D Systems, ExOne, and Stratasys.

3D Systems and Stratasys, the industry's two largest players, are quite diversified. Both make 3D printers for commercial and industrial markets and provide on-demand 3D-printing services. Stratasys also produces desktop 3D printers for the education and professional markets. ExOne makes heavy-duty industrial 3D printers that primarily print in sands (to make molds) and metals; it also provides 3D-printing services. SLM Solutions makes metal 3D printers powered by its selective laser melting technology and vacuum casting equipment.

MGI Digital Graphic Technology specializes in digital 2D-printing and finishing equipment. Apparently, it's included in the ETF because one MGI Group subsidiary, Ceradrop, manufactures equipment for the 3D-printed-electronics market.

K2M and Organovo are involved in the medical space. K2M is a medical-device company that uses 3D printing to produce some of its spine products. Organovo uses its proprietary 3D printing tech to "3D bioprint" human tissues for pharmaceutical testing, though its ultimate goal is to bioprint organs for people in need of transplants.

HP, as I mentioned, entered the 3D-printing market last year, with the launch of two enterprise-focused 3D printers. Autodesk makes design software for 3D printing and other uses, and has several 3D-printing initiatives. Trimble, a company traditionally focused on GPS, owns SketchUp, an extremely popular 3D modeling and design platform. It also partners with Belgian 3D-printing company Materialise on initiatives to streamline 3D-printing workflows. (Materialise -- a 3D-printing pure play that makes 3D-printing software and provides 3D-printing services -- is conspicuously missing from the ETF.)

Takeaway

An ideal 3D-printing ETF, in my opinion, would be more heavily weighted toward 3D-printing pure plays. That said, The 3D Printing ETF does a decent job representing the quite expansive 3D-printing realm. It seems a solid option for investors who want broad exposure to 3D printing -- a technology that is widely expected to revolutionize the manufacturing sector. As previously mentioned, the ETF's expense ratio is 0.66%, which is fairly reasonable.

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