Hi anyone can explain what is going on with ARK ETF(s)

Market go up market go down, the underlying narrative for ark has not changed

All the other responses so far seems to suggest that ARK ETF is a hyped up, speculative, overvalued ETF to invest in. I hold a different view.

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Take the flagship ARKK as a case study. It is a thematic ETF, focusing on investing in disruptive innovation themes. They identify 5 innovation areas: AI, blockchain, DNA sequencing, energy storage, and robotics.

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The impression of hype came about with their stellar performance in 2020 largely due to their largest holding in Tesla, and attracted many FOMO investors with the media non-stop reporting of their accomplishment, even calling Cathie Wood the best investor, the female Warren Buffett, etc.

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Even Cathie herself knew the influx of fund in 2020 was not going to be sustainable. There were too much money chasing the underlying stocks, and when the tides changed, those investors would jump ship in search of the next fashionable instruments. Indeed that happened in 2021, which I think is good for ARKK to take a breather and weed out the paper hands before resuming the uptrend.

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Remember the theme is disruptive innovation for ARKK. Many of the underlying stocks were and still are losing money, it will take years for their business to turn profitable. Cathie investment time horizon for these business is at least 5 years. Some of them may fail to take off, but those who make it probably become multi-baggers contributing handsome returns to the ETF. You can think of ARKK being a VC fund for listed companies.

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Have a look at ARKK 5-year performance vs NASDAQ and S&P (see attached image). Are you surprise with ARKK beating the other 2 indices even before the 2020 phenomenon rise? Even with the correction in 2021, ARKK still beats the other 2 indices by a wide margin.

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So, ask yourself:

Why did you invest in ARK ETF?

Were those reasons still valid?

What is your investment time horizon?

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Disclosure:

When I started my Core Satellite Portfolio construction in Nov 2020, I invested in Nikko AM ARK Disruptive Innovation Fund (an unit trust investing in similar underlying companies as ARKK) as one of my satellite portfolio.