ARK Innovation ETF jumped 42% this year — more than twice as much as the Nasdaq 100
Author of the article:
Bloomberg News
Emily Graffeo and Carol Massar
Published Feb 03, 2023 • 2 minute read
Join the conversation
Cathie Wood, founder of ARK Investment Management, speaking at the 2022 Milken Institute Global Conference in Beverly Hills, California. Photo by David Swanson/Reuters/File Photo Cathie Wood’s funds had a scorching start to the year and she wants investors to know it.
Advertisement 2 This advertisement has not loaded yet, but your article continues below.
REGISTER TO UNLOCK MORE ARTICLES Create an account or sign in to continue with your reading experience.
Access articles from across Canada with one account Share your thoughts and join the conversation in the comments Enjoy additional articles per month Get email updates from your favourite authors In an interview with Bloomberg’s Carol Massar and Tim Stenovec, the founder and chief executive officer of ARK Investment Management said her flagship fund now gives investors better exposure to long-term innovation than most of the market’s most popular growth stock benchmarks.
FP Investor By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails or any newsletter. Postmedia Network Inc. | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300
“We are the new Nasdaq,” Wood said. The claim is the just latest from the ARK Investment Management founder who is known for making bold predictions. She again reiterated a forecast that Bitcoin will top US$1 million per coin in the next decade.
So how does Wood’s historical performance stack up? It depends on the time frame. While the ARK Innovation ETF (ARKK) has jumped 42 per cent this year — more than twice as much as the Nasdaq 100 — the Ark fund is still down 72 per cent from its peak two years ago, underperforming the index by about tenfold. The Ark fund has posted a five-year gain of just 12 per cent versus 89 per cent for the tech benchmark.
Advertisement 3 This advertisement has not loaded yet, but your article continues below.
The Nasdaq 100’s top holdings currently include the mega-cap technology stocks that have dominated the market over the last decade: Microsoft Corp., Apple Inc. and Amazon.com Inc. While ARK Innovation ETF’s largest holding — Tesla Inc. — is also a top stock in the Nasdaq, the fund’s other big positions are concentrated in smaller, newer companies like Zoom Video Communications Inc. and cancer-test maker Exact Sciences Corp.
Recommended from Editorial How investors can ride the EV boom without betting on Elon Musk Three important investing terms that confuse investors to their detriment FP Answers: What are REITs and how do they fit into a balanced portfolio? Wood said that while 2022 was a “horrific” year for her fund’s returns amid the rapid rise in interest rates, investors sold their positions in growth benchmarks like the Nasdaq and moved into ARKK. The ETF saw positive inflows of about US$1.3 billion last year, despite plunging 67 per cent in its worst annual performance on record.
“Innovation was one of the biggest victims of the massive interest rate increase we saw last year,” she said. “We felt it every time chairman Powell spoke.”
She added that last year’s plunge was driven by “exaggerated” fears of interest rates and angst that higher inflation would remain embedded in the economy as in the 1970’s. Now, she would not be surprised if the U.S. central bank cuts rates at some point in 2023.
— With assistance from Tim Stenovec.