It has been a great few months for Cathie Wood as her Ark Innovation Fund (ARKK) has bounced back from its lowest level in 2023. It has jumped by over 73% and is now hovering near its highest point since August 2022.
Some of its top holdings have become among the best-performing stocks in Wall Street. Coinbase, its biggest holding, has surged to its highest point since 2022 as Bitcoin and other altcoins have bounced back. It has soared by over 560% from its lowest level in 2023.
Other companies in the ARKK ETF like Block (SQ), Roku, Robinhood, and Uipath have done well in the past few months.
However, the ETF has struggled to bounce back to its highest level on record. It remains 67% below its all-time high since it is trading at $51, lower from its record high of $158.
The ARKK ETF performance pales to that of other technology stocks. For one, the Invesco QQQ ETF (QQQ), which has jumped to a record high. QQQ has risen by almost 52% in the past 12 months while Cathie Wood’s ETF has jumped by less than 32%.
QQQ vs ARKK ETF
This performance is in line with what I warned a few months ago when I recommended against investing in ARKK. For one, it is a highly expensive fund that has an expense ratio of 0.75%. This means that $10,000 invested in the fund pays $75 in a year. In ten years, assuming that it remains stagnant, that amount totals $750.
Invesco QQQ is significantly cheaper than that since it costs about 0.20%. This means that it costs just $20 in a year and $200 in a decade.
Cathie Wood’s ETF has lagged behind the QQQ ETF because of its composition. It does not have any exposure to Nvidia, which has helped to power the Nasdaq 100. Also, it does not have stakes in other big tech companies like Meta Platforms and Amazon.
At the same time, Tesla is a major part of the ETF. Tesla shares remain over 50% below their all-time high as the EV industry has gotten saturated. It will take time for the company to recover as its margins remain under pressure.
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