2023 Big Winner "Sister Wood": Fed Rate Cut Boosts Tech Stocks
ARKK achieved a staggering 68% return last year, not only ranking in the top 1% among similar funds, but also achieving the best annual performance in the history of the fund. However, in the previous years of 2021 and 2022, the fund suffered an annualized loss of 50%.
"Cathie Wood," also known as the "female version of Buffett," stated that the ARK Innovation ETF (ARKK) of Ark Invest, which focuses on technology, has "paid the price it deserves" after experiencing a significant decline for two years and made a comeback with one of the best performances in the industry last year.
According to Morningstar data, with the contrarian bottom fishing in technology stocks, especially Tesla, the $8 billion ARKK achieved a high return of 68% last year, ranking among the top 1% in its category and achieving the best annual performance in the history of the fund. However, in the previous years of 2021 and 2022, the fund suffered an annualized loss of 50%.
In a recent interview with the media, Wood said, "You might think I would say this, but I do think we paid the price we deserved in 2021 and 2022, and now we are making a comeback."
ARKK had achieved a more than 150% increase in 2020 due to a large bet on Tesla. However, due to the high concentration of bets, the fund lost 23% in 2021 and further lost 67% in 2022 during the interest rate storm caused by the Federal Reserve.
Wood, known for her optimism, also stated that she expects the Federal Reserve to start cutting interest rates in 2024 and that the inflation rate will drop to deflationary levels, which will help ARKK continue to thrive.
"To be honest, I think what happened to us in 2021 and 2022— a more severe downturn than the Nasdaq index during the technology and telecommunications bubble—doesn't mean anything because the era of innovation has arrived and is ready for a golden age."
Wood previously mentioned that she is once again interested in Meta due to her optimism about Zuckerberg's strategy of using open-source AI.
However, since 2024, ARKK has been dragged down by major stocks such as Tesla and has fallen more than 10%.
Robby Greengold, a strategist at Morningstar, said, "I think (ARKK) is overly confident in its predictions, which often fail to consider enough scenarios. Its pessimistic assumptions are also overly optimistic."
According to Morningstar data, in the past four years, ARKK has either been far ahead of its peers or at the absolute bottom, showing extreme instability. Its five-year annualized return rate is 2.8%, lagging behind almost all mid-cap growth and technology funds in the same period.