Cathie Wood, CEO and Chief Investment Officer of ARK Investment Management LLC, will speak at the Sooner Than You Think Conference in Brooklyn, New York on Tuesday, October 16, 2018.
Alex Flynn | Bloomberg | Getty Images
Star Manager Cathie Wood’s flagship fund, Ark Innovation, was hit on Tuesday as growth stocks sold out.
Tuesday’s Ark Innovation fell 3.3%, along with a 1.9% fall on the Nasdaq Composite Index. “Destructive Innovation” funds fell by more than 6.4% this week and 9.2% in 2021, while S & P 500 increased by more than 10% this year.
The fund fell nearly 30% off its highs in February of this year, after which ETFs were engulfed in the threat of rising interest rates.
“High-tech stocks are very crowded,” said Stephanie Link, chief investment strategist at Hightower, in CNBC’s “Half-Time Report.” “There will be very tough comparisons going forward, but there are also valuations. If GDP growth is high and inflation is a bit high, high valuations won’t work.”
Some of Ark Innovation’s top holdings were big hits. Tesla was down 1.7% and Terra Dock Health was down 3%. Square and Roku decreased by 5.1% and 4.7%, respectively. Zillow Group fell 3.4%.
It’s hard to pinpoint the exact reason for selling tech stocks this week, interest rates remain low, and the sector is losing a week’s explosive earnings. Investors have the potential to benefit the biggest winners since the pandemic slump and turn to more utilized ones for reopening.
In addition, the threat of capital gains tax hikes may not have helped emotions.
Jim Paulsen, chief investment strategist at Leuthold Group, told CNBC that investors could be increasingly disappointed that stocks weren’t working well in the face of great earnings news. He suggested that the top of the market could be close if the “good news” was already fully priced.
Faced with this weakness, investors are withdrawing money from Wood’s funds. More than $ 290 million left Ark Innovation last week, according to FactSet. But this year, more than $ 7 billion flooded Wood’s ETFs.
Wood, as always, maintains the course during the pressure on her top holdings. After Twitter’s share price fell by 15% on Friday, Wood added 843,194 shares of Twitter to the Ark Innovation ETF and 468,256 shares to the Ark Next Generation Internet ETF. These positions are worth about $ 72.4 million, based on Twitter’s closing price on Friday.
Wood’s other ETFs also experienced intense selling pressure on Tuesday. The Ark Next Generation ETF lost 3.2% and weekly losses exceeded 5%. The Ark Genomic Revolution ETF and the Ark Automotive Technology and Robotics ETF lost 4% and 2% on Tuesday, respectively. Pairs have fallen 6.6% and 3.6% this week alone. Ark Fintech Innovation ETFs fell 3% and weekly losses were 4.3%.
Ark Autonomous Technology and Robotics ETF and Ark Fintech Innovation are Wood’s only funds on this year’s green.
Wood became popular after arc innovation rose nearly 150% in 2020.
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