Exchange-traded funds (ETFs), like those run by fund managing legend Cathie Wood, are often used as a source of revenue by investors. Yet in some cases, funds like the ARK Innovation Fund (NYSEARCA:ARKK) find themselves losing cash even when the stocks involved are doing well. That’s just what’s happening at ARK Invest, even as it outperforms most common market averages by fairly wide margins.
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With ARK Invest and similar firms performing so well, and drawing their returns from so broad a cross-section of stock issues, one might think that the funds would see investors move into them to take advantage of such returns. That’s not what’s happening, though, as many investors are actively pulling out despite the gains. That’s actually quite different from even a few years ago, when investors flooded into ETFs despite the fact that, at the time, they were seeing substantial declines.
Are investors taking profit? Smelling danger on the horizon? Such a suggestion isn’t out of line. It isn’t just Cathie Wood’s ETFs that are seeing outflows. Sustainable funds, noted one report, were seeing withdrawals as well, though the pace was starting to slow. Indeed, some signs pointed to a renewed interest in gold, as the U.S dollar began to weaken and Treasury yields started to lower. With real estate also proving tougher to buy thanks to rising interest rates, it may be that investors simply have a new safe haven in mind.
Looking at the last five days in trading for the Ark Innovation ETF displays a surprising trend. For much of those five days, trading was flat. A sudden spike, followed by a return to form, then stepped in before the fund suddenly lost around 2% of its value over the space of about a day and a half.
