Ark Invest funds are having a rough day in the market, with the flagship ARK Innovation ETF (NYSEARCA:ARKK) down roughly 5%. Unfortunately, it turns out that what makes these funds so appealing is also what hurts them on days like today. With that in mind, here is what you need to know about the plunge in the ARKK ETF and its peers.
- Most investors are familiar with Ark Invest because of its influential CEO, Cathie Wood.
- Through funds like ARKK, ARK Genomic Revolution ETF (NYSEARCA:ARKG) and ARK Autonomous Robot & Technology ETF (NYSEARCA:ARKQ), Wood offers exposure to emerging themes.
- As part of this, Wood is also known for making bold bets on equities and other assets.
So what do you need to know right now? Well, Wood is the sort of person that retail investors love to follow. She goes where other institutional investors will not go, and she has a reputation for going there first. Through her Ark Invest funds, she led the way with Tesla (NASDAQ:TSLA). She did the same with Bitcoin (CCC:BTC), and with gene-editing stocks. More recently, she announced the launch of the ARK Space Exploration ETF and sparked a major rally in names like Virgin Galactic (NYSE:SPCE).
While Wood has found great success, her big bets are also under fire in the stock market today. This means that ARKG, ARKF, ARKQ and ARKK are all tumbling.
Investors should note that it is the flagship fund, ARKK, that has the clearest reason to fall today. Tesla is the top holding in the fund, with a weight of more than 9%. Roku (NASDAQ:ROKU), its second top holding, is also down more than 7% today. This means that with investor confidence shaken in ARKK, other Ark Invest funds are likely taking some of the blow.
Ark Invest Funds: Where Does the ARKK ETF Go From Here?
As of this writing, the ARKK ETF is down 5% today. ARKG, ARKQ and the ARK Fintech ETF (NYSEARCA:ARKF) are all down between 4%-5%.
So where do these funds go from here? Is it time to panic and avoid the popular, actively managed exchange-traded funds? As Claire Ballentine wrote for Bloomberg, the dip in Tesla and Bitcoin is concerning for Ark Invest. That is because in early 2021, Wood and her funds have attracted a great deal of new investors. Hot ideas, a volatile market and the process of rocket-ship growth in electric vehicles and cryptocurrencies fueled the rise in popularity.
However, many experts think this week is just a short-term bump for TSLA and BTC. Investors are working to sort through the latest Covid-19 headlines, and promise of a $1.9 trillion stimulus package is swaying the market. At the same time though, the catalysts that powered EV stocks and cryptos are still there. Consumer adoption is growing, as is mainstream support for digital currencies.
For investors, this means you should keep the Ark Invest funds on your radar. They still represent top investing trends. When the market finds its footing again, ARKG, ARKF, ARKQ and the ARKK ETF should right themselves.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer with InvestorPlace.com.