Ark Haters Get A Dedicated ETF To Bet Against Cathie Wood

Ark Haters Get A Dedicated ETF To Bet Against Cathie Wood
Andrew Rummer

over 2 years ago1 min

Mentioned in story

Investors who believe Ark Investment Management’s best days are behind it, or who distrust founder Cathie Wood’s growth-focused investing style, now have a simple vehicle to bet against them – at least on an intraday basis.

The Tuttle Capital Short Innovation ETF (ticker: SARK) launched on Tuesday with a mandate to provide an inverse of the returns from Wood’s flagship Ark Innovation ETF (ticker: ARKK). The Tuttle ETF rose 2.7% on its debut while ARKK dropped 2.3% as Tesla – its biggest holding – sank 12%.

As the chart above shows, ARKK had a fantastic year in 2020, soaring 149%, only for the fund to flatline this year. And that indifferent 2021 performance has brought the Ark haters out of their shells: some 16% of ARKK shares are out on loan to short sellers betting on a decline. 

The new SARK ETF offers a simpler way of shorting the Ark fund, without the hassle of having to borrow and sell the stock. Over time, we might even see options launched on SARK, providing investors with even more ways to bet on ARKK’s direction.

Although there are many inverse ETFs – containing about $10 billion of investor cash in total – they generally track major stock market indexes like the S&P 500. SARK is the first to target an actively managed ETF, where humans are picking stocks.

Just remember to use inverse ETFs for short-term tactical trades rather than long-term bets, as they will diverge from their stated goal over periods of more than a day.

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