News

The $8.1 Billion Fund Soars in November

1 2 3 4 5

4.8

Andrew R. Michaud

• December 01, 2023

The $8.1 billion fund experienced significant growth in November, with a 31% increase in value. This surge came as investors embraced riskier assets amidst growing optimism that the Federal Reserve is making headway in its battle against inflation. Many are hopeful that the central bank will begin cutting interest rates as early as 2024.

Favorable Conditions for "Long Duration" Assets

Todd Sohn, ETF and technical strategist at Strategas Securities, noted that the recent moderation of interest rates, coupled with the Federal Reserve's current stance, has created a favorable environment for "long duration" assets - precisely the type of investments that ARK specializes in. Long-duration stocks are typically growth-oriented companies projected to generate substantial cash flow in the distant future. These stocks tend to be more sensitive to interest rate fluctuations and inflation.

Impressive Portfolio Performances

ARK's top 10 positions include Coinbase Global, Roku, Tesla, Zoom Video Communications, UiPath, Block, Crispr Therapeutics, Roblox, Twilio, and DraftKings - all of which have shown remarkable performance. Indeed, Coinbase Global experienced a notable 61.72% increase in share value last month, while streaming-media company Roku achieved an impressive gain of 74.92%.

Meanwhile, Tesla, historically one of ARK's largest holdings, has taken somewhat of a back seat within the portfolio. Despite this, the electric-vehicle manufacturer still exhibited a strong performance in November, with a 19.5% increase. Year-to-date, Tesla has seen a remarkable 90% surge.

Tesla's Cybertruck Launch

On Thursday, Tesla made headlines by delivering the first batch of its highly anticipated cybertrucks to customers. CEO Elon Musk hailed this new product as "potentially our best product ever." The base model of the cybertruck comes with a price tag of $60,990, surpassing initial expectations. This launch further emphasizes Tesla's innovative approach and commitment to pushing boundaries within the automotive industry.

ARKK Fund Continues to Surge in 2023

Shares of Block, the sixth-largest holding at 6.07% of the portfolio, experienced a remarkable 57.59% growth last month. Meanwhile, Crispr's stock, the seventh-largest holding at 4.5% of the portfolio, saw an impressive surge of 71.4%.

The top 10 holdings together account for almost two-thirds of the portfolio, highlighting their significance.

In a recent research report, DataTrek co-founder Jessica Rabe stated, "ARKK's outperformance since the start of the latest equity market rally shows how it tends to exhibit supercharged tech returns."

ARKK has been having an outstanding year in 2023, with a return rate of 47.6%. This far surpasses the S&P 500's 19% rise and the Nasdaq Composite's 35% jump.

This is a significant shift from ARKK's performance in previous years. In 2022, it experienced a negative return of 67%, and in 2021, total returns were at a low of minus 23%. However, in 2020, the fund thrived as its innovation- and growth-driven stocks soared during the pandemic-induced rally, with an impressive return of 153%. According to Morningstar, the fund has posted annualized returns of 2.03% over the past five years.

Despite surpassing major U.S. stock indexes, the fund has seen substantial outflows this year. Sohn, an industry expert, wonders, "Will investors return to ARK funds?" Over $1 billion has been withdrawn this year, with approximately $800 million being pulled from ARKK alone.