Bloomberg) — Investors appear to be losing patience with Ark Investment Management’s genomics fund.
The Ark Genomic Revolution ETF (ticker ARKG) has seen roughly $520 million of outflows in November amid sinking returns. The fund is down 27% year-to-date as investors shun health-care stocks in favor for more cyclical names that perform well during an economic recovery. Even so, the ETF is faring far worse than the broader biotech sector, with the Nasdaq Biotechnology Index up 10.49% this year.
ARKG is currently trading at $66.38 a share, lower than its level a year ago, before a steep rally that crested early in 2021. The genomics fund has also seen the largest outflows among Ark’s ETFs this year.
“It’s interesting that typically loyal Ark investors have been bailing on the ETF,” said Nate Geraci, president of The ETF Store, an advisory firm. “The fund’s assets have been chopped in half since February. While I don’t believe the ETF is experiencing some of sort of ‘doom loop,’ clearly the outflows are putting downward price pressure on the underlying holdings and testing the will of remaining fund owners.”
The ETF’s two top holdings, Teladoc Health Inc. and Exact Sciences Corp., have weighed on its performance, with drops of some 45% and 37% this year, respectively.
The recent outflows may be due to investors looking for shorter-term opportunities into the year-end and freeing up cash, said Sylvia Jablonski, chief investment officer at Defiance ETFs.
Ark Chief Executive Officer Cathie Wood is well-known for prioritizing longer term investments over short-term gains.
“This is a 5-10 year hold. AI in health care is going to change the way that we can predict, treat and manage the most difficult diseases like cancer, and the Ark fund gives investors access to the companies who are on the cutting edge of that research,” said Jablonski.