Less than 4 Months, Total Assets Under Management Decreased by 30%
Criticism Points to Overconcentration in Few Stocks
Wood Personal Intuition Reliance Also Criticized
Ark Investment, an asset management firm led by American investor Cathie Wood, known as the "Money Tree Sister," is reportedly struggling with record capital outflows.
According to a report by The Wall Street Journal (WSJ) on the 23rd (local time), the net outflow from six actively managed exchange-traded funds (ETFs) operated by Ark Investment this year amounts to $2.2 billion (approximately 3 trillion KRW). This is about three times the total outflow of $760 million for the entire year of last year, contrasting sharply with the $20 billion net inflow recorded in 2020, when COVID-19 was spreading.
Active ETFs refer to funds that actively implement management strategies to achieve returns exceeding market performance. Ark Investment's total assets under management in active ETFs stand at $11.1 billion, having plummeted 30% this year. Compared to the peak total assets of $59 billion at the beginning of 2021, this is about one-fifth of that level.
The cause of the poor performance of Cathie Wood's funds is attributed to the excessive concentration of fund capital in a small number of stocks. In the case of Wood's flagship fund, the "ARK Innovation ETF," seven stocks account for about half of the portfolio.
In particular, Tesla, which holds the largest proportion, saw its stock price plunge about 40% this year, while other top holdings such as Unity Software and Roku fell 43% and 32%, respectively. The ARK Innovation ETF has recorded a -16% return this year. Compared to the 6% rise in the S&P 500 index during the same period, the actual loss is considered greater.
Todd Rosenbluth, head of research at financial consulting firm BetaFi, pointed out, "Loyal shareholders of Cathie Wood's funds are feeling frustrated," adding, "This year was supposed to be a year when Ark Investment's investment style, focusing on growth and disruptive technology companies, would shine, but currently, Ark funds are concentrated in underperforming companies."
The WSJ noted, "In the asset management industry, there is criticism that Cathie Wood relies excessively on her intuition and instincts when constructing portfolios," and "especially in the case of the ARK Innovation ETF, Wood made the mistake of selling positions in January 2023 just before Nvidia's surge, drawing widespread criticism from investors, yet she repeatedly defended her decisions."
However, the media evaluated that Wood's strategy, which has long supported cryptocurrency investment, has yielded results. The stock price of Coinbase Global, the largest cryptocurrency exchange in the U.S. invested in by Wood, has quadrupled over the past year, and Ark Investment's new passive ETF tracking Bitcoin prices has reportedly succeeded in attracting over $2.5 billion in funds.
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