Famed investor Cathie Wood, chief executive of Ark Investment Management, continued to bulk up on one among her darling stocks Jan. 13 — Tesla (TSLA) – Get Free Report.
That company, after all, is the dominant electric vehicle maker within the U.S., run by controversial entrepreneur Elon Musk.
Ark Innovation ETF (ARKK) – Get Free Report bought 168,989 shares of Tesla Jan. 13, valued at $20.7 million as of that day’s close.
Tesla has plunged 65% throughout the last 12 months amid worries about production and demand issues. Investors also aren’t too thrilled with Chief Executive Elon Musk’s preoccupation along with his newly-bought Twitter.
Tesla is the No. 3 holding in Wood’s flagship Ark Innovation ETF, behind No. 1 Exact Sciences and Zoom Video Communications.
Cathie Wood’s Returns Tumble
Meanwhile, Wood’s investment performance hasn’t exactly overwhelmed the investment world over the past 12 months, as her young technology stocks have slumped. Ark Innovation ETF has slid 55% during that period and 77% from its February 2021 peak.
Wood has defended her strategy by noting that she has a five-year investment horizon. However the five-year annualized return of Ark Innovation was negative 0.2% through Jan. 13, compared with the S&P 500’s positive return of 9.4%.
The fund’s performance also doesn’t come near Wood’s goal for annualized returns of 15% over five-year periods.
Ark Innovation’s subpar returns may finally be beginning to push investors away. The $6.9 billion fund registered a net investment outflow of $287 million up to now month, in keeping with ETF research firm VettaFi. Nevertheless it still notched a $1.06 billion inflow over the past 12 months.
What Draws Investors to Ark/Cathie Wood
You may wonder why so many investors have stuck with Wood. The undeniable fact that she had one spectacular 12 months definitely helps. Ark Innovation skyrocketed 153% in 2020.
Also, Wood has change into something of a rock star within the investment world, appearing regularly within the media. She explains financial concepts in ways in which novice investors can understand.
Wood does have her detractors. Morningstar analyst Robby Greengold issued a scathing critique of Ark Innovation last 12 months.
“ARKK shows few signs of improving its risk management or ability to successfully navigate the difficult territory it explores,” he wrote.
Wood, after all, begged to differ. “I do know there are corporations like that one [Morningstar] that don’t understand what we’re doing,” she said in an interview with Magnifi Media by Tifin.