Stock rally not enough to save ARK from record 7-month losing streak
By David Randall
NEW YORK (Reuters) – A pointy rally within the broad U.S. inventory market during the last week in Could was not sufficient to save lots of star inventory picker Cathie Wooden’s ARK Innovation Fund from notching its seventh straight month of losses, extending the longest dropping streak in its historical past.
The ARK Innovation fund, which garnered billions of {dollars} from retail traders in 2020 because it soared in the course of the COVID-19 pandemic rally, fell 6.6% in Could. That decline got here on the heels of an almost 29% tumble in April, the worst within the fund’s historical past.
The fund’s 9.6% acquire in October 2021 was its most up-to-date constructive month-to-month efficiency. The fund is down almost 53% for the yr thus far. It gained 1% in morning buying and selling on Wednesday.
ARK’s portfolio of high-growth corporations has been hit laborious by the hawkish path of rate of interest hikes set out by the Federal Reserve, which have raised the price of capital and left traders centered extra on income than income progress.
Zoom Video Communications Inc, ARK’s high holding, is down almost 42% for the yr thus far, whereas Tesla Inc, its second-largest place, is down 28%. The benchmark S&P 500 is down 13.3% over the identical time.
ARK didn’t reply to requests for remark.
Regardless of these losses, traders have largely caught with the fund, sending constructive internet inflows for six of the previous seven weeks. Traders pulled a internet $69.7 million from the fund the week that ended Could 25, its first weekly loss since April 6.
The dedication on the a part of traders could also be an indication that they’re keen to abdomen losses from ARK Innovation as a result of they see it as a technique to diversify their total portfolios, stated Todd Rosenbluth, head of analysis at ETF Traits.
“Many traders that personal ARK ETFs mix them with broad market index-based merchandise, dedicating a slice of the fairness publicity to the upper threat, however increased probably rewarding thematic funding method,” Rosenbluth stated. “As such they’re keen to be extra affected person that the technique can and can bounce again.”
(Reporting by David Randall; Modifying by Will Dunham)
