Business Finance

Ark Invest’s flagship ETF has seen managed assets fall 50% from their peak as investors rotate away from high-growth stocks

"We've been through a very difficult time since the significant rotation from growth into value, and I want you to know that we're in there with you." ...

Cathie Wood, founder and CEO of ARK Investment Management LLC, speaks during the Skybridge Capital SALT New York 2021 conference in New York City, U.S., September 13, 2021.
Cathie Wood


The poor performance seen in Ark Invest's flagship fund over the past year has led to its assets under management falling by 50% from its peak last February.

The ARK Disruptive Innovation ETF saw its AUM rocket to a peak of $28 billion early last year. Its AUM has fallen to about $14 billion as of Tuesday, according to data from Koyfin.

That's a big hit to Ark Invest's revenue. Based on the fund's 0.75% expense ratio, the $14 billion decline in AUM represents a $105 million loss in annual revenue for Ark Invest.

The decline comes amid a violent rotation out of speculative high-growth tech stocks and into safer value stocks, which has been exacerbated by a Federal Reserve that is on the verge of raising interest rates and reducing its balance sheet.

Since the peak in ARK's AUM last February, the ETF's price has fallen by about 43%, suggesting that the decline in assets was driven mostly by the decline in its underlying stock holdings, but also in part by investors selling out of the fund.

That selling by investors seems to have accelerated into November and December, as investors likely sold for tax loss harvesting purposes.

But ARK's weakness last year has spilled over into 2022, with the ETF falling as much as 11% in the first two weeks of the year. Only four of the ETF's 45 holdings have generated a positive return so far this year, with some of its holdings down as much as 42% year-to-date. 

Cathie Wood is feeling the pain along with her investors, as she revealed in a recent market update that the ARK ETFs make up more than half of her retirement account, and a considerable amount of her net worth.

"I do want you to know that, of course, we've been through a very difficult time since the significant rotation from growth into value started nearly a year ago in mid-February, and I want you to know that we're in there with you," Wood said.

Read the original article on Business Insider

Leave a Reply

%d bloggers like this:
Available for Amazon Prime