Wednesday, March 22

The S&P 500 outperformed all Cathie Wood funds in the fourth quarter

The S&P 500 was once again the performance king for Q4 2021, and not a single hedge fund Cathie Wood it was able to beat the rise of an American stock market index that in the last 3 months of the year was revalued by nearly 11 percent.

This is recognized by Wood’s signature in your earnings report for the fourth quarter of 2021: It has been an unmitigated defeat in which “the six actively managed ETFs and the three self-indexed ETFs of Ark Invest They underperformed relative to the S&P 500 during the fourth quarter of the year.

Compared to 11.03 percent in which Ark Invest encrypts the revaluation of S&P 500 Through Dec. 31, 2021, funds at the Wood-managed firm suffered losses ranging from -0.57 percent on its robotics and autonomous technology ETF, to -17.32 percent on its ETF. fintech innovation.

S&P 500 (SP)S&P 500 (SP)

-44,35-0,97 %


Double-digit growth of the S&P 500 does not convince Wood

That he S&P 500 had a record year is clear, in fact, according to data from Bloomberg, last year was the first since 2001 in which all the sectoral groups of the index grew by double digits.

in the eyes of Ark Invest, however, this growth does not tell the whole truth about the financial market, even assuring that “under the surface of the large indices, the performance was not mixed, but ominous”.

“According The Leuthold Group, a record number of listed companies the New York Stock Exchange and the NASDAQ reached new lows in 2021, approximately 334 and 700 respectively, although the indices S&P 500 y NASDAQ were approaching all-time highs,” the Ark Invest report states.

“The number of new 52-week lows in the NYSE was more than double the new all-time highs reached by the S&P 500, a juxtaposition that has only happened three times in the last 60 years, the three being in December 1999, in the midst of the technology and telecommunications bubble,” he adds.

Keeps the bet despite the losses

Starting from this premise of skepticism, the report of the investment fund of Cathie Wood he argues that “long-term inflation fears are overblown because inventories have built up in the face of weak consumption.”

For this reason, the financial entity considers that during the next three to six months, the market will focus on the risk of recession in U.S, in the severe slowdown in the economies of China and emerging markets, and a possible decline in inflation.

Ark Invest, instead, maintains that the risk in the future is deflation, not inflation, a context in which he points out that “the adoption of new technologies accelerates, as companies and interested consumers are more willing to change their patterns of behavior”.

In other words, despite the losses accumulated in the last quarter, Wood’s bottom maintains his view that – following a significant correction in the innovation-related stocks over the past year that make up the bulk of his portfolio – “many of the tech leaders the market will target now appear to be in of deep value over a five-year investment time horizon.

The rest of the market does not share his vision and increases his short positions

Ark Invest’s castling of its position contracts with a portion of the market betting against the fund, which has caused short positions against its innovation ETFs to rise to 6.86 percent, just 3 hundredths below the historical maximum of 6.89 percent, according to data offered by Bloomberg.

Thus, the fund that grew up to 150 percent to close 2021 with losses of 21 percent accumulates detractors of its disruptive vision.

From Bloomberg Intelligence, even so, they warn about these short positions against Ark: “On the one hand, it’s a trade that’s working right now and people like to follow the trend, but it’s also risky as a little comment from the Fed that scare away hard-line forecasts could send its shares higher.”