Despite the ARK Innovation ETF (NYSEArca: ARKK) dropping in value by more than 54% over the past year, investors are sticking with Ark Invest’s flagship fund – and its stock picker, Cathie Wood. Data from ETF Database show that as of March 15, investors have pumped nearly $1 billion in new capital into ARKK over the past month.
“People like to bet on somebody and look someone in their face and see their conviction,” ETF Trends’ CEO Tom Lydon told Reuters. “That has helped override any concerns that this fund is broken.”
Despite its recent losses, the fund has returned an annualized average of 27.5% over the last three years, putting it in the top 2% of the 491 U.S. mid-cap growth funds tracked by Morningstar.
Wealth Consulting Group head Jimmy Lee told Reuters that ARKK’s long-term track record is one of the reasons why investors are sticking with the fund and ARK Invest’s founder and CEO Wood.
“A lot of their names purchased in the past were way too rich in valuation, but now we’re at a good entry point,” Lee added.
Lydon relayed to the media outlet a conversation Wood recently had with a client wanting to pull millions from the fund. After listening to the client’s concerns without interruption, Wood told the client: “We have the same commitment to our strategy that we did at the market top, and if you liked it back then you should love it even more because valuations have become more attractive.” Wood managed to convince the client to keep their money invested with her and add more to keep the overall allocation to ARKK the same.
ARKK is an actively managed ETF that invests at least 65% of its assets in companies relevant to the investment theme of disruptive innovation. ARK defines “disruptive innovation” as introducing a technologically enabled new product or service that potentially changes how the world works. This includes companies that rely on or benefit from the development of new products or services, technological improvements and advancements in scientific research relating to the areas of DNA technologies and the “genomic revolution;” automation, robotics, and energy storage; Artificial Intelligence and the “Next Generation Internet;” and fintech innovation.
ARKK has an expense ratio of 0.75%.
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