Cathie Wood's Flagship Ark Fund Hits 20-Month Low

TheStreet2022-02-19

Anticipation of interest rate hikes by the Federal Reserve is putting the kibosh on the stocks of young technology companies.

Chicago Cubs fans used to say that any team can have a bad century.

And now investment star Cathie Wood, chief executive of Ark Investment Management, may be saying that any fund can have a bad 20 months.

Her flagship fund Ark Innovation ETF(ARKK) slid 5% Friday to $64.80, its lowest level since June 2020. The fund and Wood’s reputation took off when it soared 157% in 2020. But it slid 23% last year, and has dropped another 31% so far this year.

The fund’s young technology stocks have suffered from rising bond yields overall and anticipation of Federal Reserve interest-rate increases.

Rising rates hurt the stocks by making the potential earnings streams of young tech companies less valuable compared to safer investments, such as Treasury bonds. In addition, many young tech companies borrow money, so higher rates increase their debt costs.

Ark Innovation’s biggest stock holdings, starting with the largest, are electric-car titan Tesla, which has slid 21% in the last three months; online healthcare system Teladoc Health, which has dropped 51% during that period; streaming platform Roku, which has lost 55%; and video meeting platform Zoom Video Communications, which has shed 52%.

Wood is unbowed by her stocks’ descent. “The important thing to keep in mind is the long-term horizon that we invest in,”she told investors last month. “We have a five-year horizon. I’ve never seen innovation on sale like it is today.”

So Wood has been snapping up shares, including Tesla,Roku and Zoom on Thursday.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

  • JamesArthur
    2022-02-20
    JamesArthur
    Bla bla bla
  • newminted
    2022-02-20
    newminted
    Baba 
  • Anselo
    2022-02-20
    Anselo
    I honestly think that if she doesnt switch out her portfolio often, she will earn more money down the line.  Her growth companies takes time to mature.
  • Mindthink
    2022-02-20
    Mindthink
    Ok
  • Aoyjai
    2022-02-20
    Aoyjai
    Maybe She should go into cryptos 
  • ProsperousG
    2022-02-20
    ProsperousG
    Ok
Leave a comment
32