Cathie Wood’s ARKK is once again taking on water.
After a tough end to 2021 and an even worse start to 2022, the active manager’s flagship “innovation” fund had been treading water for the better part of the last month or two while the market rallied on hopes of lower inflation and/or a Fed pivot.
But now, with the market once again looking volatile after Fed commentary dispelled the myth that the Central Bankers are targeting a ‘soft landing’, the fund has seen its largest monthly outflows in a year.
According to Bloomberg today, ARKK saw $803 million in outflows in August and “saw daily inflows in only six days last month”. The report rightly notes that it marks a shift in sentiment surrounding Cathie Wood, as the fund still saw steady inflows despite its plunge late last year and early this year.
Nate Geraci, president of The ETF Store, commented to Bloomberg: “Ultimately, performance is king. No matter how much conviction a manager has and how closely they stick to their beliefs, if the performance isn’t there, ultimately the outflows will follow.”
He said that some investors have seen the last month of steadying performance from the fund as a goof reason to get out. Meanwhile, the ARKK inverse ETF, the AXS Short Innovation Daily ETF (SARK), has seen its biggest monthly inflow since January.
One 38 year old investor told Bloomberg that he was drawn into Wood’s fund by her discussion of “future innovations and how disruptive they would be and that these would be enormous profit-making opportunities”. He said he has since lost faith in her vision: “When I entered it, I strongly believed in the vision. Currently, not so much, and since my initial reason for it did not still apply, I realized I should just let it go.”
Recall, we profiled earlier this month that Cathie Wood had sold 1.4 million shares of Coinbase prior to its tie up with Blackrock, which sent shares soaring.
Another 34 year old investor who has stayed with Wood’s fund lamented: “I did expect her stock selection and management to have been better than if I was buying single stocks. But at this point, I don’t know that that’s actually true.”
