Cathie Wood has received the biggest vote of investor confidence since her flagship strategy was near peak of its popularity in the cheap-money era.
(Bloomberg) — Cathie Wood has received the biggest vote of investor confidence since her flagship strategy was near peak of its popularity in the cheap-money era.
The ARK Innovation ETF (ticker ARKK) attracted $397 million of inflows on Friday, according to overnight data compiled by Bloomberg. That was the largest influx since April 2021 — a few weeks after the fund hit its all-time high in a year that saw investors pour in a whopping $9.6 billion in total.
The inflow came in the grip of the US banking turmoil that saw several lenders collapse, triggering a wider market panic. In a miserable week for equities, ARKK dropped 11% for its worst performance since September.
However the turbulence came with a potential upside for Wood and her firm ARK Investment Management: bond yields plunged dramatically, while expectations for further Federal Reserve interest rate hikes collapsed.
That’s positive for ARK because it generally bets on speculative tech stocks that are highly sensitive to rates. ARKK has now declined about 77% from its February 2021 peak as the cost of borrowing has surged.
In an email to subscribers overnight, ARK’s Maximilian Friedrich argued the turmoil in the banking industry should send a strong message to the Fed.
Ominous signals from the bond market portending recession suggest policymakers “will have no choice but to respond with lower interest rates,” the analyst and co-lead of ARK’s venture business wrote.
The cash influx will be especially welcome news after traders ramped up bets against ARKK in recent weeks on earlier signs the Fed was poised to push on with its aggressive monetary tightening. About 21% of the ETF’s outstanding shares are still sold short, according to IHS Markit Ltd. data.
Read more: ARKK Shorts Jump to Fresh Record as Rate-Hike Fears Take Toll
Due to the way ARKK trades settle, the flows arrive with a one-day lag.
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