Don’t Get Caught Holding Either of These ETFs

The Fed announced the fourth consecutive three-quarters of a percentage point interest rate hike yesterday, taking the target range of 3.75% to 4%, its highest since January 2008. A similar aggressive pace of monetary policy tightening was last seen in the early 1980s.

After the initial dovish statement, Fed Chairman Jerome Powell reiterated that the central bank would continue to battle the rising prices until it could achieve its long-term inflation target. Powell said that the terminal rate would go higher than expected earlier and that any talk of pausing rate hikes would be “premature.”

The Fed’s rate hikes are expected to push the economy into a recession, putting further pressure on the stock market.

Amid this backdrop, losing ETFs ARK Innovation ETF (ARKK) and SPDR S&P Biotech ETF (XBI) could be best avoided, as they may tumble further.

ARK Innovation ETF (ARKK)

ARKK is the flagship actively managed fund from ARK Invest, an advisory firm led by renowned investor Catherine Wood. The fund seeks to generate long-term capital appreciation by investing in businesses across the globe that seeks to benefit from disruptive innovation.

With $7.67 billion in AUM, ARKK’s top holding is Zoom Video Communications, Inc. (ZM), with a 9.30% weighting, followed by Tesla, Inc. (TSLA), with a 9.14% weighting, and Roku, Inc. (ROKU), with 6.75%. It has a total of 34 holdings.

The fund’s expense ratio of 0.75% compares to the category average of $0.51. Its fund flows came in at a negative $408.10 million over the past three months. It has a beta of 1.56.


ARKK has declined 61.5% year-to-date and 70.4% over the past year to close the last trading session at $36.46. The fund’s NAV was $37.36 as of November 2, 2022.

ARKK’s POWR Ratings reflect its bleak prospects. It has an overall…

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