Cathie Wood, CEO of Ark Invest, speaks on the floor of the New York Stock Exchange during an interview on CNBC on February 27, 2023.
Brendan McDermid | Reuters
Innovation investor Cathie Wood's struggling funds received a much-needed boost from Donald Trump's re-election, but this did not translate into investor inflows.
Wood's flagship Ark Innovation ETF (ARKK) is up more than 30% since Election Day on Nov. 5, pushing its year-to-date return to nearly 18%. Much of the profit came from his largest holding Teslawith a weighting of 16.3%. The electric vehicle maker's stock has risen about 70% since Trump's election victory.
Still, the exchange-traded fund saw outflows of $49 million in November and another $24 million in the first week of December, according to FactSet. They contributed to ARKK's total outflows of more than $3 billion in 2024, in a record year for the ETF industry that saw a whopping $1 trillion in new money.
“Investors continue to redeem shares. ARKK has lost its luster as a leading actively managed ETF,” said Todd Rosenbluth, head of research at TMX VettaFi.
The investor rose to fame during the Covid-19 pandemic for her bold calls for Tesla and popular Covid pieces like Zoom Video. However, the pandemic rally was short-lived and ARKK has lost about 60% of its value since its 2021 peak.
Wood is now betting that possible deregulation under Trump could bring about innovative developments after years of political hurdles. She believes these technological advances could stimulate the U.S. economy more than it did during the Reagan era.
Trump jab
Tesla has emerged as one of the biggest Trump beneficiaries in the ARKK portfolio as CEO Elon Musk invested $277 million in a pro-Trump campaign. Musk was even given a key role by Trump, namely to head a so-called Ministry of Government Efficiency.
After a massive post-election rally, Wood slightly reduced her Tesla stake in ARKK, selling 51,335 shares for about $21.8 million on Wednesday, according to her daily update.
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Another top performer in ARKK was Coinbasethe fund's second largest holding. The crypto exchange has seen shares rise more than 80% this year as Bitcoin surpassed the key $100,000 threshold.
Investors are confident that Trump will usher in a golden age of cryptocurrencies that would include greater regulation of the industry and a potential national strategic Bitcoin reserve or stockpile. This topic also benefited Robinhoodthe sixth-largest holding in ARKK, up more than 213% in 2024.
Still, some of ARKK's holdings have yet to return to their pandemic-era glory days, even as the tech benchmark Nasdaq Composite has hit multiple record highs. Year is down 9% this year Pinterest lost 16%.