Cathie Wood’s flagship Exchange Traded Fund (ARKK) has been hit by the tech sell-off on Wall Street.
A 20% decline from its all-time high has left Cathie Woods flagship exchange-traded fund the lowest profit for 2021. The risk was increasingly at risk on Thursday.
The Ark Innovation ETF (ticker ARKK) fell 5.2% at 10:18 a.m. in New York. Assuming this decline continues, the $ 22.9 billion fund will easily wipe out its entire price surge for the year – the latest marker on the downward path for one of Wall Street’s hottest products.
ARKK has been involved in a sell-off in expensive parts of the market, particularly the tech sector, as inflation fears mount and bond yields rise. ARKK’s largest stake, Tesla Inc., fell Thursday after a sharp drop the day before. Among some of the fund’s other large holdings, Square Inc. slumped 7% and Roku Inc. fell 4.9%.
“In a low-growth world, where interest rates are low, inflation expectations are low, and GDP growth is low, these types of companies have done well,” said Ross Mayfield, investment strategy analyst at Baird, of ARKK’s holdings . “When bond yields rise, when economically sensitive areas of the market like energy and finance outperform, these are the first in line to do so.”
Despite the recent decline, ARKK’s performance over the past year is remarkable in almost every way. The fund is up more than 240% from its March lows nearly 12 months ago, and assets are up from $ 1.5 billion.
ARKK and the $ 7.8 billion Ark Next Generation Internet ETF (ARKW) remain two of the best-performing funds in America’s $ 5.8 billion ETF industry, according to Bloomberg Intelligence.
For the most part, investors stabilized during the ARKK sell-off, adding a total of $ 611 million to the fund on Friday and Monday. This offsets the $ 150 million withdrawn on Tuesday, the last day for which data is available.
“After an impressive 2020 and continued gains in 2021, expect some digestion given ARKK’s focus on high-growth companies,” said Todd Rosenbluth, Head of ETF & Investment Fund Research at CFRA Research. “It will be interesting to see if investors show relative patience on lost days.”
– With the support of Kamaron Leach.