Cathie Wood-led ARK Investment Management’s flagship fund ARK Innovation ETF’s (NYSE: ARKK) performance during the third quarter was mixed relative to broad-based indexes, as it outperformed the MSCI World Index but underperformed the S&P 500 Index.
Among the top drags were Zoom Video Communications Inc (NASDAQ: ZM) and Roku (NASDAQ: ROKU), the company’s third-quarter report pointed out.
“We maintain high conviction in Zoom’s potential to share with Microsoft Corporation (NASDAQ: NASDAQ:MSFT) a majority of the enterprise communications platform space,” Wood said in her commentary.
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Wood said despite Roku's disappointing quarter and weak guidance, Ark research indicates its long-term growth story remains intact as consumers appear to be adopting connected TV and abandoning linear TV. ARKK has lost over 5% in the three months to September, compared with the S&P 500’s fall of 4.88%.
The ARK Autonomous Technology and Robotics ETF (NYSE: ARKQ) underperformed broad-based market indexes during the quarter, with the top detractors being Kratos Defense & Security Solutions, Inc (NASDAQ: KTOS) and UiPath Inc (NYSE: PATH). The top contributors to ARKQ’s performance were Velo3D Inc (NYSE: VLD) and Tesla Inc (NASDAQ: NASDAQ:TSLA). The fund has lost 10% in three months to September.
The ARK Next Generation Internet ETF (NYSE: ARKW), too, underperformed broad-based market indexes during the quarter. Among the top contributors to ARKW’s performance were
Coinbase (NASDAQ:COIN) Global Inc (NASDAQ: COIN) and Tesla. “ARK maintains conviction in blockchain technology’s ability to disrupt traditional business models, especially in financial services,” Wood said. The fund is down by over 6% in Q3.
The ARK Genomic Revolution ETF (NYSE: ARKG) outperformed the indexes during the period and among the top contributors were Signify Health Inc (NYSE: SGFY) and 1life Healthcare Inc (NASDAQ: ONEM), also known as One Medical. Among top drags to ARKG’s performance were EXACT Sciences Corporation (NASDAQ: EXAS) and Teladoc Health Inc (NYSE: TDOC).
“Consumer sentiment, discretionary spending, and paid search yields do seem to have impacted Teladoc’s EBITDA margin, but, in our view, those forces are transient, certainly in the context of ARK’s five-year investment time horizon,” Wood said. ARKG gained 4% during the third quarter.
The ARK Fintech Innovation ETF (NYSE: ARKF), too, outperformed broad-based market indexes during the quarter. However, the ARK Space Exploration & Innovation ETF (NYSE: ARKX) underperformed the indexes during the period, with Kratos Defense & Security and Alphabet (NASDAQ:GOOGL) Inc (NASDAQ: GOOG) being the top drags. The fund lost 0.65% during the quarter.
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