Popular American investor Cathie Wood’s Ark Disruptive Innovation exchange-traded fund could face risks brought about by risk management and volatility, FT reported.
The Ark Disruptive Innovation Exchange-Trade Fund has recorded average annual gains of about 40% in the last five years but could be left vulnerable due to a shift in sentiment.
The fund is currently down 17% this year, and 34% off its peak in February, with assets in the firm’s ETFs having dropped to $34 billion from $61 billion. The fund bets heavily on small disruptive firms, which has left it exposed amid the volatility.
Analysts warned that most of the firms in the fund are “very sensitive” to interest rates and are vulnerable to any repricing, being a high-risk, high-return strategy focusing on the costliest parts of the market.
Morgan Stanley Wealth Management Chief Investment Officer Lisa Shalett warned that Wood — known for being the ‘Queen of the bull market’ — has a blind spot when it comes to managing risks and volatility.
Wood left AllianceBernstein — where she worked under Shalett — in 2014 after her proposal to launch an ETF for disruptors was rejected.