[Practical Finance] Will the Wobbling 'ARKK' Revive Again?

[Asia Economy Reporter Junho Hwang] "The money tree (Cathie Wood, CEO of ARK Investment) is faltering."

This is the industry evaluation of the ARK Innovation Exchange-Traded Fund (ARK Innovation ETF, ARKK), which became a symbol of active ETFs last year by achieving a return of 171%. Both trading volume and returns are said to be declining. However, it is still uncertain whether this flame will be extinguished.

According to the Securities Information Portal SaveRO of the Korea Securities Depository on the 26th, ARKK did not make it into the top 50 overseas investment stocks. This contrasts with January, when it ranked 5th with a net purchase of $16.535 million (1.856 billion KRW). The net purchase amount from the beginning of the year to now is about $23.247 million (2.635 billion KRW).

Returns have also dropped significantly. The closing price of ARKK on the 24th was $108.73, down 12.79% from the beginning of the year and 30.55% from the year's highest price ($156.58). This ETF discovers and invests in stocks that correspond to disruptive innovation. It notably focused on Tesla, the American electric vehicle manufacturer, achieving high returns. However, this year, the possibility of tapering (reduction of asset purchases) due to inflation has emerged, and growth stocks have been hit hard, leading to a decline in investor sentiment toward ARKK.

However, it seems premature to predict the downfall of ARKK. Since last week, ARK Investment has been aggressively accumulating Tesla shares, rekindling interest in ARKK. CEO Cathie Wood purchased a total of 69,508 shares across three ETFs on the 19th (local time). Based on the closing price that day, the amount reached $39.16 million (44.1 billion KRW). Following this news, the downward trend of ARKK stopped. Tesla, which drew attention last year with a 734% increase, and ARKK, which attracted attention for its concentrated investment in Tesla, are likely to regain focus. As this news spread domestically, Korean investors in overseas stocks (Seohak Gaemi) also net purchased Tesla shares worth $8.952 million (1.005 billion KRW) over the period from the 17th to the 24th. It was the top net purchase in overseas stocks last week.

The CEO of an asset management company that recently launched an active ETF said, "It is true that growth stocks such as electric vehicles are currently slowing down, but it is hard to say that their growth potential has disappeared," and added, "This will be a timing to take a breather."

This content was produced with the assistance of AI translation services.