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Collect fees despite losses
According to the latest statistics of ft.com, the investment fund Ark Investment Management has earned more than 300 million USD in management fees since its founding nine years ago, while “wiping” 10 billion USD from investors. in the same amount of time.
Investors have continued to pour money into the Ark Disruptive Innovation ETF over the past two years, even though most of their investments have been damaged by the tech stock downturn.
According to data from FactSet, the “loss” period is also when the Ark fund has the highest management fees, with 70% of total revenue coming from after the peak in February 2021, and through 2023, when The situation is still not good, Ark fund still brings in more than 230,000 USD in management fees per day.
“The management fee gave ARK and Cathie Wood employees a good life, but her investors weren’t so lucky,” said Elisabeth Kashner, director of research and analysis at FactSet. ”
Investment style “risky”
ARK Fund is always ready to “bet” with emerging businesses, especially when that model possesses technology evaluated by ARK. “will shape the future of technology, robotics, biotechnology or space exploration.”
Having achieved many successes in the period 2020 to early 2021, the ARK fund has attracted more than 3 billion USD in investments in just the first two weeks of February 2021, bringing the total asset value to a record 27, 9 billion USD.
However, followed by a series of “nightmare” days when the ARK fund’s value dropped continuously, most of which came from a series of “falling” investment deals since the peak of 2021 such as Coinbase, Zoom, Shopify. , Tesla…
Many experts have pointed to ARK’s “unusually high” management fees of up to 0.75% per year, which is double that of other active ETFs on the market. But according to Morningstar data, the amount of investment in ARK has remained very stable after the crisis period.
“Many investors are running large deficits, making it impossible for them to make withdrawal and stop loss decisions,” said Ben Johnson, head of client solutions at Morningstar. stuck at the high price they bought, and they’ll keep investing in hopes that somehow, ARK will get back to that price.”
According to Todd Rosenbluth, head of research at VettaFi: “Few people decided to withdraw when the ARK fund certificate price improved slightly in early 2023.”
On the other hand, with ARK’s “horribly high” volatility, many investors have begun to use derivatives to buy and sell short the fund’s value, making profits based on the “risky” investment style. network” by Cathie Wood.
What future for Ark’s investors?
“Captain” Cathie Wood told investors in late January that “innovation has been punished,” but she continued to pledge that investing in “disruptive innovation” will lead to “exponential growth trajectory” despite incurring huge losses.
Said to be done, the ARK fund continues to launch “bottom-fishing” of many stocks that are on the decline due to unsatisfactory 2022 business results such as Tesla, Nextdoor, Unity Software, and Coinbase.
According to FactSet, since its inception, ARK investors have lost an average of 27% of their capital, meaning that each dollar invested in the fund is now only $0.73. The biggest losers were investors who bought at the peak of ARK’s value, when their investment had fallen by more than 74%.
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