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Are Investors Abandoning Ark’s Cathie Wood?

by WOOWinvest
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Are Investors Abandoning Ark's Cathie Wood?

Flagship Ark Innovation ETF with star investor Cathie Wood (ARKK) – Get the ARK Innovation ETF report With a 45% year-to-date decline through Monday, and with her tech stocks looking shaky, you might think investors would abandon her fund.

But that didn’t happen.

Ark Innovation saw an inflow of $341 million on Tuesday, the largest one-day inflow since May last year, according to Bloomberg. The fund saw inflows for the sixth week in a row.

Those who bought on Tuesday were well-timed, at least for now. Ark Innovation surged 19% from Monday’s close to Thursday’s close.

The three-day move doesn’t spell out long-term problems, but for now at least, Tuesday’s buyers should be happy. Ark Innovation is down 34% so far this year through Thursday’s close.

During the stock market’s slide this year, Wood has said her favorite has only been through a correction.

“Our goal is five years. I’ve never seen an innovative product sold like it is today,” she said in January. Wood noted that private market valuations of tech companies have surpassed stock market valuations.

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Ark Innovation Fund’s largest holding is electric car maker Tesla (TSLA) – Get Tesla Inc reportfollowed by online healthcare platform Teladoc Health (TDOC) – Get Teladoc Health, Inc. ReportsVideo streaming platform Roku (ROKU) – Get a Roku, Inc. A-level report and video conferencing service Zoom Video Communications (ZM) – Get Zoom Video Communications, Inc. Class A Report.

In addition to this year’s decline, Ark lost 23% last year, but its annualized return of 23% over the past five years has surpassed the S&P 500’s 15% annualized return.

good and bad

The Financial Times’ recent profile of Wood had both positive and negative reviews of her.

Goldman Sachs Asset Management partner Katie Koch told the Financial Times: “Regardless of performance trends, it is clear that Cathy is disrupting the asset management industry to capture the imagination of a new generation of investors.”

“She has shown great respect for retail investors by democratizing access to information.”

But Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management and boss of asset manager AllianceBernstein Wood, is less optimistic.

“Cathie is a boom or bust investor because she doesn’t divest or manage risk,” she said. “It’s a challenge she’s faced throughout her career.”

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