The flagship fund of Cathy Wood, founder of Ark Investment Company, is still losing money this year, despite its largest heavy stock, Tesla, Inc..Its share price soared to an all-time high and its market capitalization broke through the $1 trillion mark.
Tesla, Inc. accounts for about 10 per cent of Wood's $21 billion Ark Innovation ETF (ARKK). Shares in the Musk-led electric car company have soared in the global shift to electric cars, rising more than 12 per cent on Monday and up nearly 45 per cent this year.
Although the rise of Tesla, Inc. boosted ARKK on Monday, the fund fell about 2 per cent in 2021 due to the poor performance of other heavy stocks in its portfolio.
Since the beginning of August, 34 of the 46 stocks held by ARKK have fallen, especially Roku and ZoomThe loss has seriously affected the performance of the fund. To make matters worse, Wood's fund has also been reducing its holdings in Tesla, Inc. over the past few months.
Of course, for those who have held ARKK since 2016, the fund has risen 500 per cent since then, so the performance in 2021 is nothing, although it does highlight the risks of investing in cutting-edge technology.
ARKK is one of the best performing funds in 2020. But since then, rising inflation expectations and rising interest rates have weighed on the fund's performance, which could fall for the first time since 2016 for the whole of the year.
The fund has regained its rally this month, up 10 per cent so far in October after falling 9.4 per cent in September. But analysts believe the Fed's tapered bond-buying program, expected to begin in November or December, should continue to depress the damaging growth stocks that Mr Wood tends to invest in.