Is ARK Innovation ETF (ARKK) a Good Buy Right Now?

ARK Innovation ETF (ARKK – Get Rating) is an actively managed Exchange Traded Fund (ETF) that seeks long-term growth of capital by investing in domestic and foreign equity securities of companies that are relevant to the fund’s investment theme of disruptive innovation. The ETF is managed by the team at Ark Investment Management LLC, an advisory firm led by renowned investor Catherine Wood.

The ARK Innovation ETF exploded in 2020 by capturing significant inflows, increasing from under $2 billion in 2019 to more than $15 billion at its high at the end of 2020. A widespread embrace of technology that enabled work from anywhere and a low-interest rates environment resulted in ARKK’s outperformance during the pandemic.

But the fund gave up some of its gains with an approximately 24% loss in 2021. The weak performance continued in 2022, with the ARKK ETF plunging around 67%. Cathie Wood’s ARKK got slammed by high inflation and rising interest rates along with other growth funds. However, despite last year’s lackluster performance, the ETF still attracted about $1.30 billion in inflows.

Following significant losses in 2021 and 2022, Wood’s flagship ARKK has rebounded in 2023, gaining 58.5% year-to-date, driven by broad tech rebound and returning interest in top holdings, including Elon Musk-led company Tesla Inc. (TSLA).

After buying up TSLA shares on the cheap throughout this year, Cathie Wood’s ARK Invest continues to unload Tesla stock after the EV giant’s significant rally this year. Furthermore, Wood’s Ark Invest expected TSLA to hit $3,000 by 2025, an increase from its current price of $655. At that price, the automotive company would be worth about $3 trillion, based on the number of shares outstanding.

Ark Invest also expects a 50% chance of TSLA achieving fully autonomous driving within five years, which could allow the EV maker to scale its planned robotaxi service quickly, based on a note on Ark’s website.

This month, Cathie Wood revealed that her flagship innovation fund, ARKK reduced its China exposure to zero as the developing market faces an economic slowdown.

“As we always do during bear markets, we concentrated our strategies towards our highest conviction names and the Chinese names, in particular, came out one by one as we were concentrating so that now, at least in the…

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