1 Technology ETF to Buy Hand Over Fist and 1 to Avoid
Is the future of finance already written in the DNA of today's emerging technologies? Cathie Wood, CEO and CIO of Ark Invest, believes so.
Cathie Wood is defending her turbulent ARK Innovation ETF following a rocky stretch.
Following a tense presidential election of historic proportions, equity markets roared to record highs – with the S&P 500 putting on its best weekly showing in more than a year, up nearly 5%. Markets have historically done well heading into the end of most election years.
On October 28th my daily article said this: Considering the bull market of 2024, Cathie Wood's ARKK fund (she has 6 ETFs) over 2 years and a lot of sideways price action, could now be a potential player. Remember, ARKK peaked in 2021 at 159.70.
Considering the bull market of 2024, Cathie Wood's ARK Innovation ETF (ARKK) – she has 6 ETFs – has seen a lot of sideways price action. But it could now be a potential player.
ARK Innovation ETF has underperformed, returning only 15% over 5 years, versus 95% for the S&P 500. ARKK's concentrated holdings in companies like Tesla, Roku, and Coinbase are seen as poor investments with limited growth potential. The ETF's strategy of investing in large-cap companies is flawed; smaller companies are better suited for disruptive innovation.
ARK Innovation ETF experienced a classic boom and bust cycle from 2020-2022, similar to historical market bubbles. Post-bust, ARKK is trading within its pre-mania range, indicating a return to the mean. The ETF is unlikely to recover quickly and may struggle for an extended period.
I would lean on the ETF that's led by some of the world's most time-tested and financially stable companies.
eToro Group Ltd and Cathie Wood's ARK Invest have teamed up to create a new portfolio focused on technology and innovation. The ARK-FutureFirst Smart Portfolio aims to provide retail investors with access to companies at the forefront of groundbreaking technologies.
Investors hanging onto shares of Cathie Wood's line of ARK Exchange-Traded Funds (ETFs) may be ready to throw in the towel after mostly missing out on the impressive tech-led gains over the past two years or so.
The ETF continues to underperform the market and is down almost 11% since I first covered it, while the S&P 500 jumped nearly 20%. In addition to its selection process, the ETF's performance also seems to be suffering due to ill-timed buying and selling activity. Investors looking to buy growth stocks at a discount would likely be better off looking elsewhere.