Superstar stock picker Cathie Wood is in bad shape in 2021.
PATRICK T via Getty Images. Photo by FALLON / AFP
Cathie Wood’s Ark Invest ETF was hit in December as investors avoided tech stocks. Suddenly, other parts of the market are starting to look more attractive as the Fed is set to raise interest rates. Ark’s Innovation ETFs have fallen 23.7% this year, with six out of eight Ark’s ETFs in the red.
Cathie Wood’s 2021 deteriorated in December, and as investors abandoned unprofitable tech stocks, her arc-invest exchange-traded fund fell in a very volatile transaction.
ArkInvest’s flagship product, Innovation ETF, has fallen by more than 10% in December and 23.7% this year, placing it in the bear market territory.
Six of Wood’s eight major ETFs went into the red in 2021. The Ark Genome Revolution has crashed by more than 30% and Ark FinTech Innovation has decreased by about 15%.
Wood, founder and CEO of Ark Investment, embarked on an investment in stardom last year. Ark’s choice of ETFs has made great bets and profits on future technologies, from fintech to 3D printing.
Investors have become a flashy tech name, filled with cash from government and central bank stimuli. Ark’s Innovation ETF returned about 150% in 2020.
However, many of these tech bets have begun to fail in recent months as the world’s central banks have begun preparing to turn off stimulus in response to the surge in inflation. Concerns about Omicron variants are also affecting investors.
Many tech companies, especially those that Wood specializes in, are not expected to make good profits over the years. The distant returns offered by these companies are beginning to appear to be far less attractive compared to the rest of the market, as central banks plan to raise interest rates next year.
Saxo Bank’s chief investment officer, Steen Jacobsen, said in 2022 that the fiscal and monetary stimulus measures that underpin the economy and markets will decline, with the FRB eradicating liquidity by “tapering” bond purchases. I told the insider that I would face.
“And that, of course, means that high-growth stocks, which are built entirely on the basis of low interest rates and high top-line growth, are heavily affected,” he said.
Big Ark’s holdings such as Teladoc, Square and Coinbase have fallen. Much of Wood’s money would be even worse without her big bet on Tesla, which surged more than 40% this year.
As many investors have found opportunities, the sort of “reverse arc innovation ETF” betting on Wood’s stock market ticker SARK has skyrocketed by more than 20% since its launch last month.
Read more: Veteran professor Eric Gordon outlines why he doesn’t anticipate a stock market crash, calling Cathie Wood a dot-com “throwback” for her grand claims, and meme stocks. Warn against owning
However, Wood remained bright despite investors dumping Ark’s money. She told CNBC last week that it was the traditional S & P 500 powerhouse that was in the bubble because their future wasn’t that bright.
“We’re not in a bubble. If so, our strategy will fly. I don’t think we’re starting to reward innovation for what’s to come. It’s the source of our beliefs, “she said.
Wood came up with the idea of a “steroid ark” fund that also bets on stocks. And this week, Ark launches a Transparency ETF designed to track the index of “transparent” companies. Ark Invest did not respond to Insider’s request for comment.
Seen from a wide angle, it’s not that bad. The average annual total return of the Ark Fund is still around 30% over the last five years.
Saxo’s Jacobsen said Ark’s funds have a bright future and investors need to remember their assumptions.
“The premise of the Ark Fund is not to provide S & P or Nasdaq performance. We need to buy a lot of technology to embrace the concept of technology built into the future and become part of the future. lottery.”
Ark’s ETFs have been hit hard this year and most of the returns are in the red.
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