Oil / Commodities Tech - The outsized gain that turned Cathie Wood into one of the world’s most famous proponents of active fund management is quickly evaporating as some of her favourite stock picks tumble. After years of trouncing the market and just days after Wood issued a broadside against passive investing, her flagship ARKK ETF now looks set to give up all the outperformance it once enjoyed against the S&P 500 index. Wood’s strategy of picking stocks involved in disruptive innovation has fallen victim to the tech meltdown as investors flee high-priced growth shares in an environment of rising interest rates and high inflation. The fund has still gained about 127% since its inception in October 2014. But the S&P 500 had a total return of 136% over the same period. The situation worsened Monday when ARK Innovation slumped almost 10%, compared with a 3% slide in the U.S. benchmark index. The shift in sentiment against tech stocks has created a perfect storm for Wood. Rising interest rates eat into equity valuations while concerns about economic growth have cooled speculative ardour, putting shares of companies betting on new technologies particularly at risk. But the ARK Next Generation Internet ETF still handily beaten the S&P 500 since inception even after tumbling from its high.
Newsletter - May 10, 2022
Newsletter - May 10, 2022
Newsletter - May 10, 2022
Oil / Commodities Tech - The outsized gain that turned Cathie Wood into one of the world’s most famous proponents of active fund management is quickly evaporating as some of her favourite stock picks tumble. After years of trouncing the market and just days after Wood issued a broadside against passive investing, her flagship ARKK ETF now looks set to give up all the outperformance it once enjoyed against the S&P 500 index. Wood’s strategy of picking stocks involved in disruptive innovation has fallen victim to the tech meltdown as investors flee high-priced growth shares in an environment of rising interest rates and high inflation. The fund has still gained about 127% since its inception in October 2014. But the S&P 500 had a total return of 136% over the same period. The situation worsened Monday when ARK Innovation slumped almost 10%, compared with a 3% slide in the U.S. benchmark index. The shift in sentiment against tech stocks has created a perfect storm for Wood. Rising interest rates eat into equity valuations while concerns about economic growth have cooled speculative ardour, putting shares of companies betting on new technologies particularly at risk. But the ARK Next Generation Internet ETF still handily beaten the S&P 500 since inception even after tumbling from its high.