Money usually pours into winning funds. But investors aren't jumping into the monster rally by Cathie Wood's ETFs this year — which is surprising.
Shares of ARK Space Exploration & Innovation ETF and ARK Innovation ETF are up 37.5% and 35.5%, respectively. That makes them the No. 1 and No. 3 top U.S. actively traded diversified ETFs this year. Both are blowing away the S&P 500's roughly 8% return this year.
And yet, both ETFs have suffered outflows this year, says ETF.com. Investors yanked nearly $800 million out of ARK Innovation and $127 million out of ARK Space, ETF.com says. And ARK's family of 13 ETFs shed $553 million in assets this year, ETF.com said. Only its Bitcoin ETFs attracted assets this year.
The gap between the ETFs' performance and flows shows a greater skepticism of Wood's long-term performance. Morningstar called ARK ETF Trust one of the biggest wealth destroyers in the decade leading up to 2024.
"After garnering huge asset flows in 2020 and 2021 (totaling an estimated $29.2 billion), its funds were decimated in the 2022 bear market, with losses ranging from 34.1% to 67.5% for the year," said Morningstar's Amy Arnott last year. "Many of its funds enjoyed a strong rebound in 2023, but that wasn't enough to offset their previous losses."
Righting The ARKK
Even following a 35% rally this year so far, ARK Innovation's three-year annual return is just 16.2%. That lags the S&P 500's 18.2% return in that time, says Morningstar Direct.
The long-term record is crawling back. ARK Innovation's 10-year return of 14.5% tops the S&P 500's 13.5% rise. But that's tiny outperformance given the fund's enormous outsize risk. The fund dropped more than 80% from its 2021 high to its 2022 low.
And ARK Innovation is still off 50% from its high. The S&P 500 is at or near all-time highs.
ARK Is Still Swinging For The Fences
To be fair, you don't buy ARK Innovation for stability. And the fund is sticking to its goal of finding and investing in huge winners.
The fund is up 207% in just one year on Roblox, which is its fourth largest position. Its top position, Tesla, at nearly 10% of the portfolio is up 37% in a year's time. ARK Innovation also won big on recent IPO Circle Internet, which is a 5.5% position in the fund.
That's all great. But this time, investors are taking a beat before jumping back in.
Top U.S. Diversified ETFs
ARK funds are rising
| Name | Ticker | YTD market return | 3-Yr annualized return | 5-Yr annualized return |
|---|---|---|---|---|
| Benchmark:S&P 500 | 7.99 | 18.17 | 15.86 | |
| ARK Space Exploration & Innovation | ARKX | 37.50 | 22.78 | |
| YieldMax Gold Miners Opt Inc Strgy | GDXY | 36.43 | ||
| ARK Innovation | ARKK | 35.30 | 16.20 | -0.94 |
| WisdomTree Efcnt Gld Pls Eq Stgy | GDE | 32.33 | 36.81 | |
| Invesco S&P 500 Momentum | SPMO | 20.49 | 30.16 | 21.38 |
| Invesco WilderHill Clean Energy | PBW | 20.09 | -20.26 | -11.18 |
| Innovator IBD 50 | FFTY | 16.86 | 8.34 | -0.70 |
| iShares MSCI USA Momentum Factor | MTUM | 16.31 | 21.92 | 12.45 |
| Fundstrat Granny Shots US Large Cap | GRNY | 16.13 |
