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Cathie Wood’s ARKK Innovation ETF sees massive inflows despite losses

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Yahoo Finance's Alexandra Semenova joins the Live show to discuss investors pouring into Cathie Wood's ARKK Innovation ETF despite losses.

Video Transcript

JARED BLIKRE: And Yahoo Finance's Alexandra Semenova is here with the details. And Alex, this is a lot of money, $850 million. Meanwhile, the stock was actually tanking, notwithstanding yesterday's nice gains.

ALEXANDRA SEMENOVA: Yeah, Jared. Well, Cathie Wood has been the center of criticism for many months now. Her flagship ETF, the ARK Innovation Fund, is down more than 60% from its peak in February 2021 and 31% down year to date. Now not long ago, it seemed like anything Cathie Wood touched would turn to gold. As we know, her ARK Innovation Fund returned 150% in 2020, but the stock picking prowess that has made her a star on Wall Street has come into significant doubt as the speculative and typically not yet profitable tech stock picks that she favors fall out of favor among investors in this risk-off environment that we're in.

What's interesting, though, as you pointed out, is that even despite her fund's downturn, she still has investors who appear to believe in that strategy. ARK saw about $850 million in inflows over the past four weeks, even as the fund has declined, according to Bloomberg data. Some of these inflows were attributed to investors buying the dip as the market has been on its way down. But on the other hand, what has really worked for Cathie Wood is the unrelenting conviction that she has had in her stock selections. And that has been the big selling point for ARK here.

So even with the volatility and losses that her funds have experienced, she has never appeared to show any hesitation in her conviction that her strategy will ultimately succeed in the long run. You can see that optimism here in a recent webcast that we're going to show right now.

CATHIE WOOD: And innovation oriented stocks are going to, and from a relative point of view, look much, much better from a relative growth point of view than anything you'll find certainly in the value space, but even in the more traditional growth space.

ALEXANDRA SEMENOVA: So rather than having a diversified portfolio, what differentiates ARK Invest and Wood is that she bets solely on five sectors, and those include artificial intelligence, blockchain technology, and gene sequencing, among others. And for better or for worse, her commitment to these innovation-only sectors and her staying the course on them, despite the downturn, continues to be a strong suit for Cathie Wood. Jared.

AKIKO FUJITA: I mean, some would argue that it's blind faith, right? I mean, I wonder if we're making too much of the inflows. How much of this is just about the fact that it has fallen so low, that there's just a buying opportunity there?

ALEXANDRA SEMENOVA: Yeah, I mean, certainly, a lot of it is investors just trying to buy it at a discount. She has brought that idea up and has said before that her stocks are selling at a discount right now, and now is a good opportunity to buy in. So a lot of it is buying the dip. And then part of it is also just some investors really believing in her strategy and, you know, her conviction in staying the course on it. Akiko.

AKIKO FUJITA: 58.45 is a big ouch for those who got in maybe a year ago. But Cathie Wood always has us continuing to talk here. Alexandra Semenova, thanks so much for bringing us that story.