Wood's ARK Innovation Fund on pace for best month ever as battered stocks surge
Reuters
Published Jan 27, 2023 12:40PM ET
By David Randall
NEW YORK (Reuters) - Cathie Wood's ARK Innovation Fund is closing in on the best monthly performance in its history as it rides a rebound in many of the high-growth stocks that took a beating last year.
The $7.3 billion ARK Innovation fund is up slightly more than 25% for the month to date, putting it ahead of the 25% gain it notched in April 2020.
The January surge has been fueled by moves of 30% or more in some of the fund's top holdings, including Tesla (NASDAQ:TSLA) Inc, Roku (NASDAQ:ROKU) Inc, and Exact Sciences (NASDAQ:EXAS) Corp, which have rallied alongside broader markets as some investors bet inflation will ease fast enough for the Federal Reserve to end its rate hikes earlier than projected. The S&P 500 index is up 6% year-to-date after falling 19.4% in 2022.
The gains are a turnaround from 2022, when ARK Innovation dropped nearly 67% and was one of the worst performing U.S. equity funds tracked by Morningstar as the Fed's monetary policy tightening weighed on many of the high-growth stocks Wood focuses on.
Investors are awaiting the Feb. 1 conclusion of the Fed's monetary policy meeting for clues on whether easing inflation is swaying policymakers to a less hawkish view. The central bank is widely expected to increase its key policy rate by another 25 basis points next week. Rates are currently between 4.25% and 4.50%, up from zero a year ago.
"I don't want to call this month a junk rally but it definitely has that aroma," said Brian Jacobsen, Senior Investment Strategist for Multi-Asset Solutions at Allspring Global Investments. "But if the end is near for rate hikes that does tend to be a more bullish environment for lower quality and higher growth names historically."
ARK Invest did not respond to a request for comment.
Overall, January's rally has helped ARK Innovation's assets under management grow by approximately $1.2 billion this month, while investors have pulled a net $59 million out of the fund, according to Lipper data.
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Written By: Reuters
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