Cathie Wood fans, after years of steadfastness, have gone AWOL, with her suite of exchange-traded funds seeing outflows in recent months despite all of them posting impressive rallies.
(Bloomberg) — Cathie Wood fans, after years of steadfastness, have gone AWOL, with her suite of exchange-traded funds seeing outflows in recent months despite all of them posting impressive rallies.
Actively managed funds from the ARK Investment Management lineup, including the ARK Next Generation Internet ETF (ticker ARKW), the ARK Fintech Innovation ETF (ARKF) and the flagship ARK Innovation ETF (ARKK) have all suffered outflows since October, when the S&P 500 hit a low for the year before embarking on a rally that’s taken it more than 20% higher.
ARKK has seen roughly $200 million come out, as has the firm’s ETF focused on genomics, the ARK Genomic Revolution ETF (ARKG), data compiled by Bloomberg show. ARKW has notched outflows of about $80 million since mid-October.
Yet ARKW and ARKF have each rallied about 50% during that stretch, while ARKK has added 36%. A representative from ARK Investment didn’t immediately respond to a request for comment.
“Flows aren’t gravitating toward the higher-beta corners that ARK represents — performance has rebounded strongly, yet investors seemingly aren’t giving their suite the attention we’ve seen prior,” said Todd Sohn, ETF strategist at Strategas. “There’s no euphoria here, particularly compared to the 2020-2021 environment.”
Sohn is referring to a stretch during the past two years, when ARK funds, including ARKK, posted heavy losses. ARKK in 2021 declined 24%, and then another 67% last year. However, fans of Wood’s products remained loyal — the fund continued to see inflows despite the losses. Investors added roughly $4.6 billion to the ETF in 2021, and another $1.3 billion in 2022. ARKK has so far this year seen outflows of about $208 million. Were the year to end today, it would be the fund’s first-ever yearly outflow going back to its 2014 inception.
Stocks, especially tech ones, have recovered this year, thanks, in part, to frenzy around artificial intelligence, but also due to investors seeing a still-strong US economy and a Federal Reserve that could soon be winding down its interest-rate tightening campaign. The S&P 500 has advanced 18% year to date, while the tech-heavy Nasdaq 100 has surged 43%.
“Many of these investors were previously hurt by riskier strategies and are exiting these funds early out of caution,” Roxanna Islam, associate director of research and head of sector and industry research at VettaFi, said of the ARK funds. “Other investors may be holding on to their positions for now but are reluctant to add more exposure.”
–With assistance from Sam Potter, Athanasios Psarofagis and Jessica Park.
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