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The $7.3 billion ARK Innovation fund is up slightly more than
25% for the month to date, putting it ahead of the 25% gain it
notched in April 2020.
The January surge has been fueled by moves of 30% or more in
some of the fund's top holdings, including Tesla Inc, Roku Inc,
and Exact Sciences Corp, which have rallied alongside broader
markets as some investors bet inflation will ease fast enough
for the Federal Reserve to end its rate hikes earlier than
projected. The S&P 500 index is up 6% year-to-date after falling
19.4% in 2022.
The gains are a turnaround from 2022, when ARK Innovation
dropped nearly 67% and was one of the worst performing U.S.
equity funds tracked by Morningstar as the Fed's monetary policy
tightening weighed on many of the high-growth stocks Wood
focuses on.
Investors are awaiting the Feb. 1 conclusion of the Fed's
monetary policy meeting for clues on whether easing inflation is
swaying policymakers to a less hawkish view. The central bank is
widely expected to increase its key policy rate by another 25
basis points next week. Rates are currently between 4.25% and
4.50%, up from zero a year ago.
"I don't want to call this month a junk rally but it definitely
has that aroma," said Brian Jacobsen, Senior Investment
Strategist for Multi-Asset Solutions at Allspring Global
Investments. "But if the end is near for rate hikes that does
tend to be a more bullish environment for lower quality and
higher growth names historically."
ARK Invest did not respond to a request for comment.
Overall, January's rally has helped ARK Innovation's assets
under management grow by approximately $1.2 billion this month,
while investors have pulled a net $59 million out of the fund,
according to Lipper data.
(Reporting by David Randall; editing by Ira Iosebashvili and
Diane Craft)
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