Ark Innovation ETF suffered an outflow of $352 million Wednesday, the biggest one day drop since March.
Some investors aren’t reacting well to the drop of investment darling Cathie Wood’s flagship fund, Ark Innovation ETF (ARKK) – Get ARK Innovation ETF Report.
Indeed, the fund suffered an outflow of $352 million Wednesday, the biggest one day drop since March, according to Bloomberg data.
Ark Innovation has plummeted 45% over the past year, while the S&P 500 has gained 23%. Still, Ark remains up 49% for the past two years, beating the S&P 500’s 42% rise.
The fund’s biggest holdings are Tesla (TSLA) – Get Tesla Inc Report, Zoom Video Communications (ZM) – Get Zoom Video Communications, Inc. Class A Report, Teladoc Health (TDOC) – Get Teladoc Health, Inc. Report and Roku (ROKU) – Get Roku, Inc. Class A Report.
ARK Innovation Waiting for a Tech Recovery
So you can basically assume that if technology stocks rebound, so will Ark Innovation. And if tech stocks continue their recent stumble, Ark Innovation will do the same. The tech-heavy Nasdaq Composite has dropped 6% since Dec. 27.
The $352 million outflow for Ark Innovation isn’t that big a deal by itself. The fund has assets of $13.6 billion, according to Morningstar.
So fund assets have dipped 9% from the peak of about $15 billion. But only $1.1 billion of that is from outflows, with the remainder due to the falling value of the fund, according to Bloomberg. So the percentage of assets lost to investor departure is just 7%.
Investors Appear Worried About ARK
It seems fair to conclude that going forward, investors will continue to act based on fund performance. If Ark rebounds, it will likely add investors. And if it keeps falling, it will likely lose them.
It’s easy to forecast tech stocks going either way. Higher interest rates and slower economic growth could hurt them. But the soaring demand for tech products that have boosted tech companies’ earnings could buoy the stocks.
