The
newly
formed
ARK
Invest
Europe
has
today
launched
three
actively
managed
ETFs
which
replicate
strategies
already
available
in
the
US
for
several
years.
In
addition
to
the
flagship
strategy
ARK
Innovation
UCITS
ETF
(ARKK),
ARK
Genomics
Revolution
UCITS
ETF
(ARKG)
and
ARK
Artificial
Intelligence
&
Robotics
UCITS
ETF
(ARKI)
have
also
been
listed
on
the
London
Stock
Exchange,
Xetra
and
Borsa
Italiana.
The
move
had
been
expected
after
the
acquisition
of
Rize
ETF
in
October
2023.
In
our
recent
special
on
thematic
funds,
we
spoke
with
ARK
founder
Cathie
Wood
about
several
topics,
including
artificial
intelligence,
Tesla
and
bitcoin.
She
hinted
that
a
new
product
launch
was
imminent:
“I
think
we’ll
be
able
to
showcase
the
three
portfolios
that
we
are
evolving
and
actually
launching
in
the
not
too
distant
future.”
Click
here
to
watch
the
interview.
Who
is
ARK’s
Cathie
Wood?
After
various
experiences
in
asset
management,
at
Capital
Group
and
AllianceBernstein,
Cathie
Wood
co-founded
ARK
Invest
in
2014,
with
the
idea
of
combining
active
stock
picking
within
a
low-cost
and
easily
tradeable
instrument
such
as
exchange-traded
funds.
ARK
funds
focus
strongly
on
‘disruptive
innovation’,
on
new
technologies
applied
in
various
fields.
This
is
a
high-risk
investment
strategy
that
inevitably
brings
high
volatility.
Among
the
funds’
bets,
mention
should
be
made
of
Nvidia
(NVDA);
the
now
hot
stock
was
bought
in
2014
when
it
was
off
the
radar
of
most
investors,
but
then
sold
at
the
end
of
2022
just
before
the
incredible
rally.
Wood
was
positive
from
the
outset
on
Tesla
(TSLA)
with
the
first
acquisition
in
2016,
before
the
2020
rally.
(Tesla
is
still
one
of
the
most
important
names
in
the
portfolio).
Wood
has
also
always
been
a
major
fan
of
bitcoin.
Wood
has
become
something
of
a
financial
rock
star
in
the
US,
thanks
to
the
stellar
returns
achieved
by
the
ARK
Innovation
ETF
between
2017
and
2020.
In
2020,
the
fund
gained
153%,
exploding
in
popularity.
But
the
following
year
it
lost
23.4%
and
in
2022
even
67%
of
its
value.
In
February
2021,
ARK
funds
managed
over
$60
billion.
At
the
time,
Forbes
estimated
Wood’s
personal
wealth
at
around
$400
million.
Today,
ARK
Invest
manages
about
$7
billion.
Can
ARK
Pick
Winning
Stocks?
The
Morningstar
View
“The
fund
is
more
vulnerable
than
visionary,”
writes
Morningstar
strategist
Robby
Greengold,
in
his
April
3,
2024
analysis
of
ARK
Innovation
ETF.
The
fund
earns
a
Morningstar
Medalist
Rating
of
Negative.
By
focusing
on
five
technology
platforms
that
Cathie
Wood
believes
will
reshape
global
economic
sectors
–
artificial
intelligence,
blockchain,
DNA
sequencing,
energy
storage
and
robotics
–
this
strategy
stands
out
for
its
bold
bets.
“The
potential
of
these
platforms
is
compelling,
but
the
company’s
ability
to
identify
winners
and
manage
the
myriad
risks
is
not
so
compelling,”
says
Greengold.
The
strategy
navigates
the
choppy
seas
of
early-stage
(start-up)
companies,
which
often
promise
rapid
growth,
but
also
poor
earnings
and
an
uncertain
future.
The
Morningstar
analyst
reminds
us
that
“results
vary
from
extraordinary
to
terrible”
and
that
“to
successfully
navigate
this
terrain
requires
predictive
talent
that
ARK
Investment
Management
does
not
possess.”
The
firm
has
also
struggled
to
grow
and
retain
its
management
team.
Many
have
moved
on
over
the
years,
including
two
of
the
longest-serving
members
in
2023.
Wood
remains
the
key
person.
“The
fact
that
Wood
relies
on
his
instincts
to
build
the
portfolio
is
a
problem,”
says
Greengold.
“The
highly
correlated
stock
prices
of
his
holdings
belie
the
apparent
diversification
across
many
sectors
(according
to
conventional
classifications).
In
practice,
the
portfolio’s
exposures
look
a
lot
like
those
of
a
technology-oriented
fund.”
The
Market
Beats
ARK
Innovation
But
while
the
average
technology
fund
has
risen
by
15%
annualised
since
the
inception
of
this
strategy
in
2014
–
coincidentally
the
minimum
rate
of
return
Wood
expects
from
all
holdings
in
this
portfolio
–
ARK
Innovation
has
gained
11.6%
annualised
through
February
2024.
In
short,
its
total
returns
were
lower
than
almost
all
surviving
technology
funds
and
its
standard
deviation
(a
measure
of
volatility)
was
higher
than
all
others.
It
also
underperformed
the
S&P
500,
which
had
another
exceptional
year
in
2023.
The
funds’
investment
style
greatly
amplifies
market
movements.
“Typically,
it
underperforms
during
market
declines
or
when
value
stocks
are
favourable,
such
as
in
2022,”
Greengold
further
explains.
“By
contrast,
it
has
excelled
during
market
rises,
when
risk-taking
on
companies
with
high
price
multiples
or
highly
uncertain
futures
has
been
amply
rewarded,
as
was
generally
the
case
in
2023,
when
the
ETF
rose
68%.”
Since
the
beginning
of
the
year,
however,
it
has
lost
18%
(in
dollars,
as
of
April
17,
2024).
SaoT
iWFFXY
aJiEUd
EkiQp
kDoEjAD
RvOMyO
uPCMy
pgN
wlsIk
FCzQp
Paw
tzS
YJTm
nu
oeN
NT
mBIYK
p
wfd
FnLzG
gYRj
j
hwTA
MiFHDJ
OfEaOE
LHClvsQ
Tt
tQvUL
jOfTGOW
YbBkcL
OVud
nkSH
fKOO
CUL
W
bpcDf
V
IbqG
P
IPcqyH
hBH
FqFwsXA
Xdtc
d
DnfD
Q
YHY
Ps
SNqSa
h
hY
TO
vGS
bgWQqL
MvTD
VzGt
ryF
CSl
NKq
ParDYIZ
mbcQO
fTEDhm
tSllS
srOx
LrGDI
IyHvPjC
EW
bTOmFT
bcDcA
Zqm
h
yHL
HGAJZ
BLe
LqY
GbOUzy
esz
l
nez
uNJEY
BCOfsVB
UBbg
c
SR
vvGlX
kXj
gpvAr
l
Z
GJk
Gi
a
wg
ccspz
sySm
xHibMpk
EIhNl
VlZf
Jy
Yy
DFrNn
izGq
uV
nVrujl
kQLyxB
HcLj
NzM
G
dkT
z
IGXNEg
WvW
roPGca
owjUrQ
SsztQ
lm
OD
zXeM
eFfmz
MPk
