"Wood Sister" deserves the title of "Queen of Elasticity". ARKK flagship fund soared 31% in November.
Under the influence of the rising expectations of interest rate cuts and the rise of risk assets, the flagship fund ARKK Innovation ETF managed by 'Wood Sister' achieved its best monthly performance since 2014 in November, with a growth rate of 31%, soaring 35% year-to-date. Despite the impressive 150% return in 2020, ARKK has been underperforming in the past two years and has also faced capital outflows this year. Other ETFs under ARK Investment Management, founded by 'Wood Sister', have also performed well. However, ARKK has shown average performance in terms of fund inflows, attracting relatively less capital.
Cathie Wood, also known as "Wood Sister," is making a comeback.
Driven by expectations of interest rate cuts and the rise of risk assets, ARKK Innovation ETF, the flagship fund managed by Cathie Wood, saw a record-breaking increase of 31% in November, with a soaring 35% year-to-date. However, since mid-September, ARKK has been lagging behind the Nasdaq 100 Index.
This reminds people of ARKK's peak performance in 2020. In that year, ARKK achieved an extraordinary return of 150%, and all five funds managed by Wood Sister had annual returns of over 100%.
It is reported that the fund's top holdings, Coinbase Global (cryptocurrency trading platform) and Roku (streaming media platform), both saw gains of over 60%, contributing to the record-breaking performance in November.
However, ARKK's fund flow performance is not as impressive. The ETF attracted approximately $150 million in November, which pales in comparison to the monthly flow of $1 billion during the peak of the pandemic.
According to reports, ARKK is expected to experience net outflows for the first time in 2023.
In addition, among the top-performing non-leveraged ETFs in the United States this month, three of them are under ARK Investment Management, founded by Cathie Wood. Among the approximately 800 actively managed non-leveraged stock ETFs, ARK also occupies three out of the top four spots.
The second-largest fund, ARKF (ARK Venture Fund), also saw its best monthly return since June this year.
Jay Hatfield, founder of Infrastructure Capital Management, commented:
"Compared to the rebound of large tech stocks during the banking crisis earlier this year, the rise in November is a major risk market."
While the outstanding monthly performance of ETFs like ARKK cannot be ignored, their continuous underperformance over the past two years is also noteworthy.
Firstly, including ARKK, every ETF under ARK has faced outflows this year. According to data from Morgan Asset Management, among the $460 billion flowing into US ETFs this year, actively managed funds accounted for a record-breaking 24%. However, the investment strategies in the active fund field do not seem to apply to funds like ARKK.
Secondly, in 2022, as the Federal Reserve embarks on the most aggressive interest rate hike cycle in decades, valuations of technology companies have been severely suppressed, causing Wood Sister's funds to suffer setbacks. As a representative product of ARK, ARKK's price plummeted by 21% and 67% in 2021 and 2022, respectively. According to the reported data, ARKK is currently 70% lower than its historical high reached in February 2021. In comparison, the Nasdaq 100 index has risen by about 15% during the same period, only 4% lower than its historical high set in 2022.
Nate Geraci, President of ETF Store, said:
"Investors have been scarred by their experience with ARK over the past few years." "It will take a sustained period of outstanding performance for ARK investors to come back together."