Chinese crackdown on bitcoin deals another blow to Cathie Wood’s ARK ETF

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Cathie Wood, Founder and CEO of ARK Investment Management LLC, speaks at the Skybridge Capital SALT New York 2021 conference in New York, United States on September 13, 2021. REUTERS / Brendan McDermid / File Photo

NEW YORK, Sept. 24 (Reuters) – China’s moves to crack down on bitcoin trading have dealt another blow to Cathie Wood’s ARK innovation fund, which outperformed all other U.S. equity funds in the year last but is now mired among the worst of his peers.

Wood, who said bitcoin will climb to $ 500,000, has invested just over $ 1 billion in cryptocurrency trading firm Coinbase Global Inc (COIN.O), a position that is roughly $ 4. 7% of its $ 21.7 billion fund. Coinbase shares fell more than 1.5% on Friday after Chinese regulators announced a blanket ban on all crypto and mining transactions. Read more

China’s move sparked a massive sell-off of bitcoin, dropping the value of the world’s largest cryptocurrency by more than 5% to around $ 42,475.

ARK Innovation (ARKK.P) was down 1.4% at midday on Friday.

The declines come as several of Wood’s top holdings this year collapse in a market rally that has pushed the benchmark S&P 500 (.SPX) up more than 18% for the year to date .

High-profile ARK ETF has lagged the S&P 500 on an annual basis since early March

While shares of Tesla Inc (TSLA.O), Wood’s largest holding, are up 8% for the year, significant positions in companies such as Teladoc Health Inc (TDOC.N) and Zoom Video Communications Inc (ZM.O) are down 20%. or more over the same period amid a pullback in home tech stocks that dominated during the COVID-19 lockdowns of 2020.

ARK Invest did not respond to a request for comment on this story.

Overall, the ARK innovation fund is down 4.4% for the year to date, placing it in the bottom 100th percentile among the other 595 US mid-cap growth funds, according to Morningstar.

Over the past five years, however, the fund has grown 42.3% on an annualized basis, placing it in the top percentile of its category.

This strong long-term performance is likely what is keeping retail investors from selling their stake in the fund this year despite its poor performance, said Todd Rosenbluth, director of fund research at CFRA.

“ARKK is down for the year and has lagged significantly behind index growth ETFs, but most investors have remained loyal, likely due to fond memories of earlier periods of relatively strong performance,” he said. -he declares. “But as the recent period of underperformance persists, it is more difficult to justify not considering alternatives.”

Reporting by David Randall in New York Additional reporting by Saqib Iqbal Ahmed in New York Editing by Ira Iosebashvili and Matthew Lewis

Our Standards: The Thomson Reuters Trust Principles.

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