Investors are continuing to abandon Cathie Wood's flagship fund, ARK Innovation ETF (NYSE:ARKK). Over the past week, ARKK lost $151.2 million in AUM, representing about 2% of the fund.
The exodus comes as ARKK continues to struggle in what has largely been a hot market. As of the time of writing, ARKK is down almost 7% since the markets closed in 2023. For comparison, the SPDR S&P 500 ETF Trust (NYSE:SPY) is up almost 8.5% in the same period.
No Nvidia?
Many investors pulling out of the fund are at odds with Wood's take on Nvidia (NASDAQ:NVDA). Wood had entirely divested ARKK of NVDA by January last year, missing out on the monster run that saw the company become the 3rd largest in the world behind only Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL).
Wood believes that a correction is likely for the AI darling and the semiconductor industry at large. She believes that the downstream value of AI, at least in the short term, will not be enough to sustain the pace of current AI infrastructure spending. Add this to reduced lead times on the manufacturing end that will ease the chip "shortage" experienced last year and a correction seems possible.
Wood is also a major backer of Tesla (NASDAQ:TSLA), ARKK's second-largest holding. Tesla has invested in its own chip technology and already has advanced manufacturing centers in place that could create a vertically integrated rival to Nvidia in the future.
Despite its future promise though, Tesla has struggled this year, down roughly 14% this month alone.
COIN
Wood's top bet at the moment is Coinbase (NASDAQ:COIN). The crypto pioneer has been ARKK's biggest winner as of late, up over 50%, YTD. This has come as Bitcoin (CRYPTO: BTC) reached new highs, above $72,000.
For The Bears
For traders not buying what Wood is selling, inverse ETFs may provide a straightforward way to bet against a stock, avoiding the complications that come with option trading. The AXS Short Innovation Daily ETF (NASDAQ:SARK), which aims to return the inverse performance of ARKK, is a perfect example.
Traders still bullish on Wood and her fund and wanting to maximize their view, can buy a leveraged fund, like the AXS 2X Innovation ETF (NASDAQ:TARK) which aims to return twice the daily return of ARKK. TARK was awarded Best ETF Launch at Benzinga's 2023 Fintech Awards.
Featured photo by Jason Blackeye on Unsplash