ARK Just Cast Its Net All The Way Across To Europe

ARK Just Cast Its Net All The Way Across To Europe
Paul Allison, CFA

5 months ago1 min

What’s going on here?

ARK Invest is casting its net across the Atlantic, snagging European counterpart Rize ETF.

What does this mean?

Cathie Wood, ARK’s captain, has always sailed a steady course: even during the 2022 tempest, she held firm to the belief that the tech tide was just beginning to rise – and judging by 2023’s AI-driven market surge, she wasn’t wrong. But it’s not all been positive: a few navigational errors in recent years have thinned out ARK’s asset treasure chest massively, so the purchase of Rize might just be the compass the firm needs. At the very least, it’s a savvy strategy to replenish the assets ARK’s managing.

Why should I care?

Zooming in: Missing the tide.

On the face of it, ARK’s flagship Innovation ETF has grown by a respectable 36% this year. But when you realize it’s still anchored 70% below its 2021 peak and trails the Nasdaq 100’s 39% rise, it’s clear the firm’s hit some rough seas. And the fact of the matter is that ARK’s stockpickers have come up short. Case in point: offloading Nvidia earlier in the year, and missing its meteoric ascent. Given that the stock would have been perfect for a tech fund focused on long-term investments, that’s not just a misstep: it’s walking the plank.

ARK Innovation ETF
Source: Google Finance

Zooming out: European catch-up.

Performance aside, ARK’s visionary calls have been on the money, and this move into Europe looks particularly savvy. After all, ETFs currently make up just 8% of European investments, according to ETF giant iShares, compared to 12% in the US. Plus, the US tech sector, now a colossal 30% or so of the S&P 500, was a mere 10% ten years ago – and Europe could be on the cusp of something similar.

Europe ETFs
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