With the expectation of a rate cut by the Federal Reserve stimulating the rebound of innovative technology stocks, Cathy Wood, the head of Ark Investment and known as “the female stock god” on Wall Street, has just achieved the best monthly performance in history for her flagship fund.
In November of this year, Wood’s flagship fund Ark Innovation ETF (ARKK) rose by 31%, achieving its strongest monthly performance since its establishment in 2014. The fund rebounded significantly from three consecutive months of decline, pushing its gains so far in 2023 to 51%.
ARKK mainly invests in companies that align with disruptive innovation themes. The main drivers behind the fund’s rise in November include biotechnology companies CRISPR Therapeutics and Twist Bioscience, as well as streaming giant Roku, cryptocurrency trading platform Coinbase, payment platform Block, and e-commerce platform Shopify. The stock prices of these companies have all risen by at least 50%.
Still far from the historical peak
However, despite ARKK’s strong rebound this year, it is still far from enough to offset the huge declines over the past two years. The fund fell by 67% in 2022 and 23% in 2021.
Currently trading at around $46 per share, ARKK is less than half of its closing price of $124.48 per share in 2020 and far from its historical peak of nearly $160 per share set in February 2021.
ARKK’s performance over the past few years has shaken investor confidence. According to FactSet data, the fund has experienced outflows totaling approximately $664 million this year. However, with ARKK’s significant rebound, it attracted approximately $150 million in November.
The holdings under ARKK are expected to benefit from AI
Artificial intelligence (AI) has undoubtedly been one of the hottest topics on capital markets this year. Wood believes that many large companies she holds will be major beneficiaries of the AI boom, including Tesla, cloud communications software provider Twilio, and automation software company UiPath.
Wood warned last month that the US economy may experience a hard landing. However, she believes that AI can save the economy.
“The deflationary force brought about by innovation will lead to lower interest rates, which is beneficial for economic growth,” Wood said. She pointed out that there are three technologies in particular that should drive significant growth: artificial intelligence ranks first, followed closely by robotics and energy storage.