As Cathie Wood's flagship fund fell to a new low in 2024, she made a large purchase of the stocks of tech companies that had suffered a market crash. Taking advantage of the general decline in the stock market, Wood's ARK Innovation ETF (ARKK) bought stocks of companies such as Amazon, AMD, and Roku Inc. According to the statistical data released daily by her company, Ark Investment Management, Wood's fund focused on fintech also purchased stocks of Reddit Inc. and Meta Platforms Inc.
In the context of the general stock market decline, causing many tech stocks to plummet, Wood seized the opportunity to enter the market. Wood's ARK Innovation ETF (ARKK) bought stocks of companies such as Amazon, AMD and Roku Inc. According to the statistical data released daily by her company, Ark Investment Management, Wood's fund focused on fintech also purchased stocks of Reddit Inc. and Meta Platforms Inc.
Earlier this week, weaker-than-expected US employment data raised concerns about a possible greater economic downturn, and global markets therefore shook. Tech stocks, which have been driving the stock market up for the past few months, have borne most of the losses, though most of the industry's stocks still maintain healthy gains this year.
But Wood's ARKK is not. This actively managed fund has been in the red since the beginning of this week and is still falling, closing at its lowest level since November on Wednesday. The fund has fallen more than 20% this year and its value has shrunk by about 75% from its peak in early 2021.
"It has been a challenging few years for ARKK," said Todd Sohn, ETF strategist at Strategas. Regarding this week's purchases, he said, "ARKK has always made highly resolute and concentrated investments through its ETF - the team tends to take advantage of opportunities in which the market has experienced a sharp decline to increase long-term investment in its strongest ideas."
In 2020, in a year when tech stocks performed well, Wood's ARKK fund rose 150%, winning over retail investors. Despite the fluctuating performance in subsequent years, including losses in 2021 and 2022, investors remained steadfast for a period of time, pouring money into the ETF month after month. However, this enthusiasm is now waning.
As of Tuesday's close, investors have withdrawn $2.2 billion from ARKK year to date in 2024, making the fund likely to be the most outflow year since its inception in 2014. According to data compiled by Sohn at Strategas, the seven active funds in her ETF lineup have seen a total outflow of $11.5 billion since early 2021.
Representatives of Ark have not immediately commented.