Cathie Wood’s flagship exchange-traded fund (ARKK) is caught up in selling tech on Wall Street.
A 20% drop from its all-time high left Cathie Wood’s flagship exchange-traded fund with the slimmest gains for 2021. It looked increasingly risky on Thursday.
The ETF Ark Innovation (ticker ARKK) fell 5.2% at 10:18 a.m. in New York. Assuming that this decline continues, it will easily see the $ 22.9 billion fund erase its entire price lead for the year – the latest declining marker for what remains one of the hottest commodities in the world. Wall Street.
ARKK has been the victim of a massive sell-off in expensive segments of the market, particularly in the tech sector, as inflation fears grow and bond yields rise. ARKK’s largest stake, Tesla Inc., fell on Thursday after falling sharply a day earlier. Among the fund’s other big investments, Square Inc. fell 7% and Roku Inc. fell 4.9%.
“In a low-growth world where rates are low, inflation expectations are low, and GDP growth is low, these types of companies have performed well,” said Ross Mayfield, investment strategy analyst at Baird. , about ARKK’s holdings. “When bond yields rise, when economically sensitive sectors of the market like energy and financials outperform, it’s the types of companies that are the first to take it on the chin.”
Even with the recent drop, ARKK’s performance over the past year is still remarkable in almost every respect. The fund is up more than 240% from its March low almost 12 months ago, and assets are down $ 1.5 billion.
ARKK and the $ 7.8 billion Internet Ark Next Generation (ARKW) ETF remain two of the top-performing funds in the US $ 5.8 billion ETF industry, according to data from Bloomberg Intelligence.
For the most part, investors were held steady during the ARKK sale, with a total of $ 611 million added to the fund during trading on Friday and Monday. This makes up for the $ 150 million withdrawn on Tuesday, the last day for which data is available.
“After the impressive 2020 and continued gains in 2021, some digestion is to be expected given ARKK’s focus on high growth companies,” said Todd Rosenbluth, Head of ETF and Fund Research. mutual funds at CFRA Research. “It will be interesting to see if investors show relative patience in bad days.”
–With help from Kamaron Leach.