ARK Investment, one of the fastest-growing fund managers in 2020, has just seen its flagship company enter a bear market, highlighting a rapid sell-off of technology-related stocks amid a persistent rise in interest rates. .
Led by the CEO and founder of the company, Cathie Wood, the fund traded on the ARK Innovation ARKK exchange,
fell 6.3 percent on Wednesday, leaving it down 20 percent from its high at $ 156.58 on Feb. 12, meeting the definition of a bear market commonly used by market technicians.
The ARK Innovation ETF boasts $ 24.6 billion in assets, but focuses on vibrant companies, including Tesla Inc. TSLA,
Square Inc. SQ,
Teladoc Health Inc. TDOC,
Zillow Group Z,
and Roku Inc. YEAR,
they proved to be an advantage – and, ultimately, a disaster – for the fund.
The decline in the fund comes as Nasdaq Composite COMP,
fell 2.7% to record the worst two-day skid for the September 8 technology-laden index, according to Dow Jones Market data.
Investors have avoided technology in favor of so-called value stocks, those that are considered undervalued in relation to growth stocks, which have records or prospects for colleagues who exceed.
An increase in the 10-year yield on the TMUBMUSD10Y treasury stock,
on Wednesday, at around 1.47%, it supported the rotation of technology and technology companies and energy and financial companies, which are expected to perform better as the economy recovers from the COVID-19 pandemic.
Technical names are more vulnerable to withdrawal at a higher interest rate, as those actions do not tend to yield and operate in areas considered overvalued by some measures.
Wood is known for directing investments in growing names and disruptive innovations. In the last year, ARK has seen the assets of the seven funds traded on the stock exchange explode more than ten times.
But now, investors are wondering how the flight fund manager will respond to richer returns and the shift to undervalued companies, as vaccine launches and waiting for COVID aid packages help increase bets on less-favored sectors of the market.
Wood recently told CNBC that she is not bothered by returns and anticipates a withdrawal, swearing she will double some bets, even if rates remain high, providing a “reality check” for her strategies. He seems to have raised his stake in Zoom Video Communications ZM,
who has been a beneficiary of the trend from work to home lately.
See: Analysts say Zoom Video can continue to thrive in a vaccinated world
Reports also indicated that Tesla bought more as the shares of the electric vehicle manufacturer fell.
Shares of Ark Innovation have fallen 8.6% so far this week, maintaining a gain of less than 1% year-on-year. By comparison, Dow Jones Industrial Average DJIA,
has increased by 2.2% so far in 2021, the S&P 500 SPX index,
is up 1.7% and the Nasdaq COMP Composite Index,
increased by 0.8% after being hit in recent sessions.