Cathie Wood, CEO and chief investment officer of ARK Investment Management.
Alex Flynn/Bloomberg
Exchange-traded funds from ARK Investment just keep heating up.
After surging more than 150% in 2020, the firm’s flagship product, the ARK Innovation ETF (ticker: ARKK), has returned 24% year to date and added $4.6 billion in new assets, as of Tuesday. Total assets under management are now at nearly $27 billion, up from $17 billion at the end of 2020. The ETF closed down 1.2% on Wednesday.
ARK Innovation has taken in the most new assets in 2021 among almost all ETFs, behind only the Vanguard S&P 500 ETF (VOO).
ARK Innovation isn’t the asset manager’s only popular product. All of its five actively managed ETFs have added more than $1 billion in new assets in 2021 and all have returned more than 20% as of Tuesday. The ARK Autonomous Technology & Robotics ETF (ARKQ) has gained the most, nearly 30%. Four of the five funds have slipped on Wednesday, however, as the S&P 500 also closed just below the break-even line.
Over the course of 2020, ARK Investment took in a total of $20.5 billion across all its ETF products. Just 1½ months into 2021, the inflows have already reached 60% of that amount, hitting $12.5 billion as of this week.
The huge influx of new cash to ARK funds has raised a challenge for its portfolio managers: Continue to find new investment ideas while not reaching capacity limits in certain small stocks. Bears have also cautioned about the highflying valuation of some of ARK funds’ holdings, as well as some of the volatile assets like Bitcoin.
As the fund continues to rally, short interest in ARK Innovation has seen a notable uptick in recent days, now making up 3.77% of its total shares outstanding, according to FactSet data. That’s an all-time high in bearish bets against the ETF, albeit still low compared with other funds.
Still, investors in ARK ETFs, many of whom are fervent believers of CEO and chief investment officer Cathie Wood, are bullish about the future of disruptive innovation companies, while others not already in the funds rushed to pour money in, out of fear of getting on the train late and missing out on gains.
It’s an understatement to say that ARK has become a phenomenon now.
Wood has acquired a new nickname as the “money tree”. There are now a line of merchandise inspired by ARK—both official or unofficial. Wall Street banks are issuing structured notes based on derivatives-powered trades of the ARK funds. The company’s trading activity, which is published daily, could move a single stock’s price. Even just the announcement of a new ARK space ETF lifted nearly the entire industry.
Write to Evie Liu at [email protected]
