Bridging the info gap between Wall Street and Main Street as the Reddit frenzy continues
In South Korea, retail investors have given Cathie Wood a nickname: “Money Tree.” Looking at the pile of cash now managed by Ark Investment Management, it’s easy to see why.
Ark’s exchange-traded fund assets under management crossed US$50 billion this week, up from only US$3.6 billion at this time last year, according to data compiled by Bloomberg. In 2021 alone, investors have funneled almost US$11 billion in Wood’s family of funds.
The new record underscores the flood of money pouring into thematic products, tracking topics like genomics and fintech, as retail traders put money to work in funds with relatable narratives. Wood’s eye-popping returns catch the pros’ attention, while her approachable persona attracts investors just starting out.
“This is a key milestone, and a sign that the ETF business is not just dominated by firms tracking indexes,” said Todd Rosenbluth, director of ETF research for CFRA Research. “Given investor focus on long-term thematic investing, there’s room for additional growth for Ark and other active managers.”
In South Korea, retail investors are swarming to buy thematic products and Cathie Wood has become something of a celebrity. In social media posts they refer to her as “돈나무”, which roughly translates as “Money Tree.” The facts back that up -- her ARK Innovation ETF (ARKK) has gained 19 per cent already this year, on top of a 149 per cent rise in 2020.
In fact, due to popular demand, Ark recently launched a line of merchandise. Offerings include T-shirts that say “Truth Wins Out” and baseball caps with “Stay Innovative.” There’s even a baby onesie with “Invest in the Future” on the front.
The allure faded a bit last week as GameStop Corp. stole the headlines and the main ARKK fund went four days without an inflow. Also shorts are building in the US$25.4 billion fund. Short interest as a percentage of shares outstanding on ARKK is nearly 1.5 per cent, down slightly from an all-time high of 1.9 per cent earlier this month, according to data from IHS Markit Ltd.
Critics warn Ark could face headwinds, since her funds are so heavily exposed to technology companies that saw tremendous gains during the pandemic lockdowns. As the economy reopens and a broad market rotation takes hold, tech stocks could suffer.
Still, Wood’s name recognition is only growing, and her stamp of approval is enough to move stock prices. Her inclusion of DraftKings Inc. in the ARK Next Generation Internet ETF (ARKW) boosted the sports-betting company’s shares 8.6 per cent earlier this week.
“Performance leads to inflows,” said Mohit Bajaj, director of ETFs for WallachBeth Capital. “All their funds have done very well, which had led to such huge amounts of money going into them. Investors still believe in the fund manager.”