Ark Innovation struggling as investors turn away from growth and tech stocks
It was one of the worst days in weeks for the Nasdaq as investors sold off their tech stocks in droves last night.
Apple shares fell by 3.5%, while Amazon and Alphabet, owner of Google, were down by 2.2% and 1.7% respectively in a show of concern over the companies’ high valuations.
The Nasdaq more broadly was down by 1.9% to 13,633.50, its weakest day since late March. The S&P 500 lost 0.7%, down to 4,164.66.
A recent dip in the Tesla share price, in addition to a move out of growth and technology stocks, has caused downward pressure on ARK Innovation, the star performing exchange-traded fund of 2020, managed y Cathie Wood.
According to Morningstar data, the $23.1bn fund confirmed gains of less then 1% last month, nearly 3% below the average fund in its category.
Since the beginning of the year the ArkInnovation ETF is down by 9%, while the S&P 500 is up by 10.9% over the same period.
Shares in Tesla, the fund’s biggest holding at 10.5%, are down 4.5% since the beginning of the year, playing a significant role in the fund’s fall.
“The market has rotated away from the fund’s favored growth stocks toward more economically sensitive segments of the market,” said Todd Rosenbluth, head of ETF and mutual fund research at CFRA. “We think if underperformance continues longer, some investors will become frustrated and seek an alternative.”
