Trying to time the market paid out big time for investors betting against Cathie Wood’s flagship fund this year.
The $361 million AXS Short Innovation Daily ETF (ticker SARK), which uses swap contracts to track the inverse performance of Wood’s main fund, has soared more than 111% since launching one year ago. That’s the second best performance among the nearly 450 ETFs that launched over the past year, Bloomberg data show.
Fueling SARK’s dominant performance is a historically aggressive Federal Reserve. A series of super-sized rate hikes have fueled a surge in Treasury yields, which in turn have dragged down the speculative, growth-oriented technology names, like Zoom Video Communications Inc. and Tesla Inc., that populate the $7 billion ARK Innovation ETF (ARKK)’s portfolio. ARKK has tumbled more than 70% over the past 12 months.
“Timing is such an underrated factor in launches. Anyone that launched an inverse fund in 2021 or 2022 is doing well,” Bloomberg Intelligence ETF analyst Athanasios Psarofagis said. “Sometimes the stars just align.”
SARK’s first-year performance is among the 20 best of all-time measured against funds that are still trading, Psarofagis said. It ranks just below the $10 billion ProShares UltraPro QQQ (TQQQ), which rallied roughly 118% over its first year of trading.
On the other side of the trade, funds tied to ARKK’s success have faltered. The $40 million AXS 2X Innovation ETF (TARK), which is from the same issuer as SARK and tracks double the performance of Wood’s fund, has plunged more than 64% since launching in May.
This article was provided by Bloomberg News.