Ark’s Flagship Fund Falters As Unprofitable Tech Falls Out Of Favor

Ark’s Flagship Fund Falters As Unprofitable Tech Falls Out Of Favor
Andrew Rummer

almost 3 years ago1 min

Mentioned in story

Cathie Wood’s flagship Ark Innovation exchange-traded fund (ETF), a poster child for disruptive tech, dropped to the lowest level since November on Thursday as bearish options bets on the ETF surged to a record. 

After a stellar 2020 that saw the fund soar 149% as investors bet the pandemic would accelerate the adoption of high-tech trends from video conferencing to online shopping, Ark Innovation has struggled so far this year. The actively managed fund’s price (shown in pink on the chart above) had declined 31% from its peak in February, and put option trading volume – a sign of traders betting on further losses (shown in blue) – has jumped. 

Investors have cooled their enthusiasm for the least established companies since the start of the year. Goldman Sachs’s basket of unprofitable US-listed tech stocks (shown in the chart below) has tumbled 34% from its February high. 

Chart of Goldman's basket of unprofitable tech stocks

Many of Ark Innovation’s biggest holdings, from Spotify to Zoom, are firmly in the red for 2021. If you remain a believer in Wood’s vision of investing in “disruptive innovation” – companies with the potential to upend entire industries and eventually create massive profits – the current dip could present an interesting opportunity.

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