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Cathie Wood, CEO of Ark Invest, speaks during an interview on CNBC on the floor of the New York Stock Exchange on Feb. 27, 2023.
Brendan McDermid | Reuters
Innovation investor Cathie Wood’s struggling funds enjoyed a much-needed boost from Donald Trump’s reelection, but that hasn’t translated into investor inflows.
Wood’s flagship Ark Innovation ETF (ARKK) has surged more than 30% since Election Day on Nov. 5, pushing its year-to-date return to nearly 18%. Much of the gain came from its biggest holding Tesla, with a 16.3% weighting. The electric vehicle maker’s stock has skyrocketed about 70% since Trump claimed victory.
Still, the exchange-traded fund suffered $49 million in outflows in November and another $24 million in the first week of December, according to FactSet. They added to ARKK’s total outflows of more than $3 billion in 2024, in a record year for the ETF industry that experienced a whopping $1 trillion in new money.
“Investors continue to redeem shares. ARKK has lost its luster as the leading actively managed ETF,” said Todd Rosenbluth, head of research at TMX VettaFi.
The investor shot to fame during the Covid-19 pandemic for her bold calls on Tesla and popular Covid plays such as Zoom Video. However, the pandemic rally proved short-lived and ARKK has since lost about 60% of its value from its 2021 peak.
Wood is now betting that possible deregulation under Trump could sprout innovative developments after years of policy hurdles. She believes these technology advances could turbocharge the U.S. economy more powerfully than during the Reagan era.
Trump bump
Tesla has emerged as one of the biggest Trump beneficiaries in ARKK’s portfolio because of CEO Elon Musk, who poured $277 million into a pro-Trump campaign effort. Musk even got assigned a starring role by Trump, leading a so-called Department of Government Efficiency.
Following a massive postelection rally, Wood trimmed her Tesla holding in ARKK slightly, selling 51,335 shares on Wednesday for about $21.8 million, according to her daily update.
Another top performer in ARKK has been Coinbase, which is the second-largest holding in the fund. The crypto exchange has seen shares rally more than 80% this year as bitcoin exceeded the key $100,000 threshold.
Investors have grown hopeful that Trump will usher in a golden age of crypto, which would include more supportive regulation for the industry and a potential national strategic bitcoin reserve or stockpile. This theme also benefited Robinhood, the sixth-biggest holding in ARKK, which has skyrocketed more than 213% in 2024.
Still, some of ARKK’s holdings have yet to return to their glory heydays during the pandemic even as tech benchmark Nasdaq Composite has hit multiple record highs. Roku is down 9% this year, while Pinterest has lost 16%.