(This article was originally written in English on January 20, 2022 and translated into Spanish for this edition)
Growing interest in exchange-traded funds (ETFs) was prominent on Wall Street in 2021. Net inflows into US ETFs reached a record $ 910 billion, according to research and research firm CFRA.
However, not all ETFs were winners. After an incredibly strong performance in 2020, Cathie Wood’s flagship fund, ARK Innovation ETF (NYSE :), was among the worst performing in 2021. And the decline trend has reached 2022, where it has already fallen by approx. . 20% so far this year.
ARKK has not been the only Cathie Wood fund to disappoint its investors over the past 12 months. ARK Next (LON 🙂 Generation Internet ETF (NYSE 🙂 and ARK Genomic Revolution ETF (NYSE 🙂 also outperformed broader markets.
At the same time, in early November 2021, Tuttle Capital Management (TCM), which offers themed ETFs, launched the Tuttle Capital Short Innovation ETF (NASDAQ :). SARK’s investment objective is to place daily bets against the ARKK fund’s shares. Logically, the SARK symbol stands for “Short ARK”.
Tuttle’s CEO, Matthew Tuttle, has not cut his hair when it comes to expressing his views, especially on popular ETFs and Special Purpose Acquisition Partnerships (SPAC). He does not consider it an appropriate investment to buy and hold, especially given the high valuation of most ARKK shares.
However, Cathie Wood does not seem to be worried about this reversal against her fund, and said in an interview with Bloomberg in November:
“It’s the market, isn’t it? I’m never worried about anyone supporting Ark’s underlying stocks or this new ETF.”
However, the uncertainty surrounding the central bank’s potential moves and overvalued valuations make the current market environment difficult for many popular funds and retail investors to manage.
That’s why today’s article looks at both ARKK and SARK so that readers can better assess which side of the equation they want to be on now. Let’s take a closer look:
1. ARK Innovation ETF
Current price: $ 75.75
52 week car: $ 75.70-159.70
Cost ratio: 0.75% per year
Cathie Wood and her team focus on groundbreaking innovations such as artificial intelligence, automation, robotics, the genetic revolution and blockchain technology. That is why ARK Innovation ETF invests in companies at the heart of this development. The fund began trading at the end of October 2014.
This actively managed ETF typically contains between 35 and 55 stocks. Looking at the ARKK sector scale, which now has 43 participants, we have cloud computing (13.0%), digital media (11.9%), e-commerce (10.9%), gene therapy (6.0%) and large data and machines. study (5.6%).
More than 90% of the companies come from North America. The top 10 stocks account for more than 55% of the portfolio. In other words, it is a very concentrated fund.
Tesla (NASDAQ 🙂 is at the top of the list and takes 8.3% of the portfolio. This is followed by Zoom Video Communications (NASDAQ :), Teladoc Health, Roku, Coinbase Global (NASDAQ :), and Exact Sciences.
In mid-February 2021, the ARKK went to $ 159.70, which is a historic high. Since then, it has lost about 50%. In fact, in January this year, the ETF fell more than 19.9% and reached a 52-week low yesterday. For comparison, so far in 2022, the CPI and the CPI have decreased by 3.7% and 6.5% respectively.
THE ARKK remains a strong ETF with almost 16.1 billion dollars in net assets despite a significant drop in prices. Readers who rely on the fund’s long-term growth strategy could see this reduction as an opportunity to buy ARKK.
2. ETF Tuttle Capital Short Innovation
Current price: $ 45.52
52 week car: $ 29.54- $ 45.52
Cost ratio: 0.75% per year
Actively managed SARK aims to repeat the reverse (-1x) daily return of ARKK ETF. Therefore, you use derivatives, such as swaps, in one day. Like other reverse ETFs, SARK is not necessarily an appropriate fund for a longer holding period.
Description: SARK Daily Chart
SARK started trading on November 9, 2021, at an opening price of $ 29.94. It was launched in part on the grounds that ARKK was significantly overvalued and owned shares without sufficient (or any) profit to justify sky-high valuations. The ETF now has $ 89.1 million under management.
Since the beginning of the year, SARK has risen by 22% and has also returned a profit of around 48% since the beginning. Readers with experience in reverse ETFs may want to consider SARK’s day trading as a way to protect potential long-term gains from their ARKK investment.
(NOTE: If you are interested in financial products that I mention in the article and can not find them in your area, you could ask your broker or money manager).
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