The competition could be paying the price in 2023 if Ark Invest can keep up with its early performance at the start of the year.
After beating the S&P 500 and many ETFs for years, Ark Invest — led by Cathie Wood — saw its ETFs drop significantly in 2022. The move came due to several macro issues. Also, many of the high-growth technology companies Ark Invest has in its funds saw severe pullbacks on valuation and growth concerns.
Here’s a look at what’s happening in 2023 and what could be next.
See Also: Cathie Wood Sells Shares Of JD.Com For First Time In 6 Months
What Happened: Ark Invest launched its first four active funds in October 2014:
- Ark Innovation ETF ARKK
- Ark Next Generation Internet ETF ARKW
- Ark Autonomous Technology & Robotics ETF ARKQ
- Ark Genomic Revolution ETF ARKG.
Those funds generated a strong response from the market with market-beating returns and Wood’s famous call on Tesla valuation in 2018.
Ark later launched the Ark Fintech Innovation ETF ARKF and the Ark Space Exploration & Innovation ETF ARKX in 2021.
In 2022, the SPDR S&P 500 ETF Trust SPY declined 19.2%. That was its biggest one-year fall since 2008. Ark ETFs saw drops of over 50% in some cases and were among the most notable big losses by ETFs for the year.
The ETFs from Ark Invest are starting 2023 out strong with all six of the funds listed above beating the 5% year-to-date performance of the SPDR S&P 500 ETF Trust.
- ARKK: +23.5% year-to-date
- ARKW: +23.2%
- ARKG: +19.4%
- ARKQ: +13.8%
- ARKF: +21.7%
- ARKX: +9.3%
While it’s still early in the year, Wood might be ready to quote LL Cool J and say, “Over the competition, I’m towering.”
With eight years of fund performance and years of beating the market, Wood had many detractors in 2022. Now, she might have a reason to sing: “Don’t call it a comeback, I been here for years. I’m rocking’ my peers, puttin’ suckers in fear.”
What’s Next: Time will tell if the competition for Ark Invest is “payin’ the price” as investors less than one month into 2023.
Wood and Ark Invest have been helped by the strong performance amongst its top holdings all outperforming the S&P 500 and broad index funds.
Here’s a look at the top five holdings of the flagship Ark Innovation ETF, the largest from Ark by assets, and their year-to-date performance:
- Exact Sciences EXAS, 9.4% of assets: +41.9% year-to-date
- Zoom Video Communications ZM, 8.4%: +6.5%
- Tesla Inc TSLA, 7.7%: +30.6%
- Roku Inc ROKU, 6.9%: +34.8%
- Block Inc SQ, 6.4%: +22.7%
The top five holdings of the Ark Next Generation ETF and their year-to-date performance:
- Block Inc, 8.5% of assets: +22.7% year-to-date
- Zoom Video Communications, 7.4%: +6.5%
- Roku, 7.1%: +34.8%
- Coinbase Global COIN, 6.6%: +62.2%
- Grayscale Bitcoin Trust GBTC, 6.3%: +51.1%
Many of the companies listed above are Wood’s favorites. The strong performance of each stock is giving Ark Invest ETFs a boost to start the year. Likewise, the poor performance of many of these stocks was also a big reason why Ark Invest had poor performance in 2022.
Tesla was previously the top holding of several Ark Invest ETFs before a portion of the stake was sold off in 2022.
At the end of 2022 and early 2023, Ark has been re-accumulating shares of Tesla. This could mark a bullish sign for Tesla investors with one of its biggest supporters re-adding to the position and placing a big bet for the future of the electric vehicle leader.
Wood tends to focus on innovation and future growth for companies; 2023 could be a big year for Ark Invest as it looks to post a sharp rebound and show its investment strategy has lasting longevity in a period not hurt by macro issues (i.e., war and high inflation).
After the weak performance in 2022, the two largest Ark Invest ETFs in ARKK and ARKW are down 9% and 7.1% over the last five years respectively. The ETFs will need a strong 2023 to get back to a positive five-year return and will also need to show strong returns for years to come for many to see Wood as the visionary she was once recognized at.
Is this the start of a comeback or will the market knock out Wood?