Cathie Wood’s Innovation ETF is set for its best month ever as battered tech stocks come back strong
Cathie Wood is poised for her best month ever as her beaten innovation darlings staged a big comeback in the new year. Wood’s flagship Ark Innovation ETF (ARKK) jumped more than 3% on Tuesday, taking its January return to more than 27%. The fund is expected to have its strongest month since its inception in 2014. Leading the 2023 rally were last year’s biggest laggards, including Coinbase, which has soared about 66% since inception. of the year. Shopify, Tesla, Exact Sciences, Roku and Nvidia have all rallied over 30% this year. The big bounce came after a brutal year in which ARKK lost 67% as interest rates rose. “Much of the downward trend in inflation and interest rates has been priced into the multiple structure of the market and punished innovation stocks disproportionately,” Wood said in a webcast. for investors earlier this month. The innovation investor said macro trends should start working in his favor. It has been calling for deflation for some time, betting that the high prices that emerged in 2021 were caused by temporary Covid-related supply issues. Meanwhile, Wood said the United States entered a recession last year, due to excess inventory. Now, the economic slowdown, coupled with falling inflation, should prompt the Federal Reserve to reverse monetary policy, which would benefit its funds, she said. “A recession is much worse for value and cyclical sectors than it is for the growth-oriented and innovation-driven sectors that lead there,” Wood said. Despite the dramatic rebound, the innovation-focused fund saw no major inflows in the new year – just $2m in new money for the fund with over $7bn in assets under management, according to FactSet. The muted streams marked a marked difference from the same month last year, when it enjoyed $238 million in admissions. Investors have also backed the fund, even amid heavy losses last year when ARKK gobbled up over $1 billion, and that’s part of the 3% of all exchange-traded funds in the US. United, according to FactSet. “Ironically, many investors stuck with ARK strategies in 2022 when the fund suffered losses,” said Todd Rosenbluth, head of research at VettaFi. “While some of them have lost patience with the idea that 2023 will be a year of recovery, the ETF’s net inflows of $ 1 billion … last year are a sign of an investor base very faithful and patient.” Wood has spent the new year continuing to buy the drop in his favorite tech names. The widely followed fund manager bought the battered Tesla for a few months during the sale. She also bought 239,920 shares of Teladoc on Monday when the stock fell 5.5%.
Cathie Wood’s Innovation ETF is set for its best month ever as battered tech stocks come back strong
