Morningstar go studs up on ARK Invest’s flagship ETF

Have you ever briefly moved away from watching a football game just to hear another spectator shouting “Ooooaf”?

In that case, you’ll probably guess that someone got into the field, probably because of a challenge that used to be called a ‘reducer’. That was before, you know, an injury to someone stopped being a point of pride in sports sometime in the mid-2000s.

On Wednesday, one corner of the second floor in Beit Barkan received such noise from this FT Alphavillain. This time, however, it was not out of evidence for a horror challenge, but after reading a connect Published by the Morningstar Funds Research Store and explains why it downgraded Cathie Wood’s flagship rating of the ARK Innovation ETF.

Pass on Roy Keane, there’s a new saddle in town, named Robbie Gringold, CFA.

Here is an excerpt:

Since its meteoric rise in 2020, the fund traded on the Strategy Stock Exchange has been one of the worst-selling funds in the U.S., with the aggressive growth stocks it held falling back to Earth. With a 7.9% drop in the average fund in the Morningstar Technology category and a 4.3% loss in the Russell Midcap growth index. (The strategy behaves more like a technology fund than its mid-growth category.)

Okay, but I’m sure she learned a lot from such humiliation right?

Principal Cathy Wood has since doubled her risky approach in hopes of repeating 2020, when highly volatile growth stocks were in favor. It put the portfolio at greater risk by cutting its stock to 35 from 60 less than a year ago – thus increasing its stock-specific risk – and increasing its aggregate exposure to companies in which ARK Investment Management has a large stake. The strategy has actually become less fluid and more prone to severe losses. Wood manages a variety of exchange-traded funds that often place joint bets on stocks and cannot close to new investors – a possibility that open-ended mutual fund competitors can use to preserve their liquidity and investment opportunities.

Ah. Well, I’m sure there’s an experienced team of risk managers out there keeping an eye on things. What’s Ruby?

The firm has no risk management personnel.

wait, what?

Wood’s reliance on its instincts to build the case is a responsibility. This is a high-risk, agnostic benchmark portfolio that invests between technology platforms that the team believes will revolutionize the way sectors around the world operate. The company prefers companies that are often unprofitable and whose stock prices are highly adjusted. Instead of estimating the aggregate risk exposures of the portfolio and simulating their effects over a variety of market conditions, the company uses its past as a guide for the future and sees the risk almost exclusively through its bottom-up research lens on individual companies.

Okay okay but the rest of the closet team has a lot of experience, so maybe the differential attitude to risk management is fine.

ARK has a bad inheritance plan for 66-year-old Wood, who is vital as the company’s majority owner and individual portfolio manager. Research director Brett Winton will replace her if necessary, but his 15 years of industry experience do not include anyone as a director. Exacerbating a key man’s risk is the company’s inability to develop and retain talent: many of its analysts have come and gone, and most of the remaining nine have no in-depth experience in the industry.

Well Ruby, what do you really think?

Wood suggested that risk management is not with her but with those who invest in ARK funds. It is difficult to understand why this should be so. ARK can do more to prevent serious pulls of wealth, and its indifference to the issue has hit many investors recently. It could hurt more in the future.

This made us wonder, what has Kathy’s flagship fund been trading on in recent days?

Turns out, not much. Here is his commercial record during the Shitko rally on Monday:

And the commercial high during Tuesday’s Shitco sale:

Everything seems quiet. A little too quiet.

Morningstar go studs up on ARK Invest’s flagship ETF Source link Morningstar go studs up on ARK Invest’s flagship ETF

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