ARK Investment, one of the fastest growing asset managers in 2020, saw its flagship enter the bear market, highlighting rapid sales in growing, technology-related stocks amid continued increases in interest rates.
Led by the company’s CEO and founder, Cathie Wood, the commercialization fund ARK Innovation ARKK,
fell 6.3% on Wednesday, leaving it down 20% from the high of $ 156.58 set on February 12, meeting the definition of a bear market commonly used by market technologists.
The ARK Innovation ETF has $ 24.6 billion in assets, but the focus is on influential companies including Tesla Inc. TSLA,
Square Inc. SQ,
Teladoc Health Inc. TDOC,
Zillow Z Group,
and Roku Inc. ROKU,
proven – and, more recently, bane – for the fund.
The decline for the fund comes as the Nasdaq Composite COMP,
it fell 2.7% to record the worst two-day slip for a tech-loaded index since Sept. 8, according to Dow Jones Market Data.
Investors have been keeping an eye on technology for so-called value-added stocks, the ones that are considered scarce, against growth stocks, which have records or expectations for growing peers. older.
Increase in yield of TMUBMUSD10Y 10-year Finance note,
to around 1.47% on Wednesday it has been the basis for the rotation of tech and technical companies and into energy and finance, which is expected to perform better as the economy recovers. recover from the COVID-19 pandemic.
Technical names are more vulnerable to withdrawal in a higher interest rate regime as these stocks are unlikely to offer yields and operate in areas that are overvalued.
Timber is notorious for targeting investments in vegetative names and turbulent inventions. Over the past year, ARK has seen the assets in its seven trading funds explode more than tenfold.
But now investors are questioning how the top asset manager will deal with richer yields and shifts to underdeveloped companies as a vaccine distributor and expect COVID aid packages to help drive Bet on less popular market segments.
Wood recently told CNBC that she is not worried about a outcome and expects to pull back, voting to double down on some bets, even as rates remain high, providing a “fact check ”For its strategies. She is reported to have upgraded her stake in Zoom Video Communications ZM,
which has benefited from the recent work-from-home movement.
See: Analysts say Zoom Video can continue to thrive in a vaccine world
Reports also showed it had bought more Tesla as the electric vehicle maker’s shares were down.
Ark Innovation shares are down 8.6% so far this week, relying on a gain of less than 1% so far. In contrast, the Dow Jones industrial average DJIA,
up 2.2% so far in 2021, S&P 500 SPX index,
is up 1.7% and the Nasdaq Composite Index COMP,
it’s up 0.8% after being beaten in the last few sessions.