The present travails of ARK Invest founder Cathie Wood in the world of exchange-traded funds are no secret. The star investor’s flagship ARK Innovation ETF
is down for the year and notably down 11% so far in December, even as the broader market has enjoyed new records for the S&P500 index.
That is, perhaps, why Matthew Tuttle is a bit surprised that an anti-Cathie Wood ETF that was launched back in mid November hasn’t drawn more inflows.
“I am surprised,” Tuttle told MarketWatch in a Tuesday interview.
“We’ve had a couple of holidays since the launch so I’m sure that goes into the mix,” but “I don’t think the vast majority of people have grasped what I think this [ETF] is and it’s a better hedging tool” than other products out there, he said.
Tuttle Capital’s short ARK ETF, which is known as Tuttle Capital Short Innovation ETF
is designed to inversely track Wood’s flagship fund comprised primarily of investments that have come to be referred to as unprofitable technology stocks. Such investments include Coinbase Global
Zoom Video Communications Inc.
and Teladoc Health
among others, which have performed poorly in the recent period, as investors worry that higher interest rates and a sluggish economy may hurt companies that may depend more on debt.
But while ARK Innovation is seeing a double-digit drop on the month, SARK, referring to the ticker symbol of Tuttle’s short-Cathie Wood fund, is up over 8% in December and has gained 4.7% so far this week.
Of course, many are betting that Wood, whose funds in 2020 averaged a return of about 180%, will make a stellar come back in 2022. CNBC reported that ARK inflows have remained healthy, even though they are down 15% from a peak of 201 million shares back in April, and despite the fact that the ETF is down 25% in the year to date.
For its part, SARK isn’t quite yet boiling an ocean with attention to its fund. After peaking at around $110 million in assets back in November and December, doing so in a speedy three week-period, the ETF is holding at around $85 million, Tuttle said.
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Tuttle makes the case that you don’t need to be negative on Wood and her suite of funds to see SARK as an attractive hedge, especially since shorted products like the Invesco QQQ Trust or other ETFs that offer bets that pay off if tech stocks fall don’t deliver enough of the unprofitable companies that Wood offers in her funds.
Both SARK and ARKK offer identical expense ratios of 0.75%, which translates to an annual cost of $7.50 for every $1,000 invested in the funds.
It’s anyone’s guess how SARK or ARKK perform in coming months.
In a recent blog post, Wood said after doing some soul-searching, the fund manager is sticking to her game plan and encouraged investors to have a longer-term performance outlook.