It was a rough few months, but Ark Investment Management’s Cathie Wood is back.
Inflows are picking up, the firm’s pile of assets under management is growing once again, and her flagship fund has gained 26% since its May low. Now the question is, can she keep it going?
The stock picker turned cult figure, who seemingly got every call right as the coronavirus outbreak reshaped the U.S. economy in 2020, earlier this year suffered her first major blow since emerging into the mainstream.
At one point her Ark Innovation exchange-traded fund (ARKK) was down almost 40% from its peak as concerns about higher inflation hammered the high-flying tech names she famously backs.
Yet over the past month and a half, Wood has managed to claw her way back. Her main fund has erased its losses for the year, a welcome milestone for her legions of loyal followers, most of whom stood by her even during the downturn.
Of course, inflation jitters could return at any time, which would once again cause growth shares to fall and drag down Wood’s picks.
“ARKK’s holdings are such long duration assets that the biggest risk is interest-rate expectations,” said James Pillow, a managing director at Moors & Cabot Inc. “As long as interest rates remain on the back burner, long-duration assets like tech can remain well bid.”
A representative for Ark Investment Management didn’t respond to a request seeking comment.
ARKK rallied for a seventh day Friday, the longest winning streak since last July. Over the span investors have plowed more than $900 million into the fund, far exceeding the roughly $250 million they withdrew in April and May, the first monthly outflows since 2019.
Amid the rebound, some of her lesser known ETFs have done even better. The ARK Autonomous Technology & Robotics ETF (ARKQ) is up 12.5% year-to-date, while the ARK Fintech Innovation ETF (ARKF) has climbed 8%.
“People are creating emotional ties to her,” said Mike Bailey, director of research at FBB Capital Partners. “Some of them have probably made money over the past few months, so that strengthens the ties. It would take meaningful month-after-month of underperforming results to break that.”