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


© Reuters. FILE PHOTO. Cathie, the founder and CEO at ARK Investment Management LLC speaks during Skybridge Capital New York 2021 Conference in New York City. September 13th, 2021. REUTERS/Brendan McDermid/File Photo

By David Randall

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

Wood has approximately $4 billion in Coinbase Global Inc. This is 4.7% of the fund’s $21.7 billion. After a Chinese regulatory announcement, Coinbase shares fell by more than 1.5% Friday.

China’s decision triggered bitcoin’s selloff. The value of the most valuable cryptocurrency worldwide fell more than 5 percent to $42,475.

Friday’s trading session saw ARK Innovation fall 1.4%.

The declines come as several of Wood’s top holdings this year are floundering during a market rally that has pushed up the benchmark more than 18% for the year to date.

(GRAPHIC: Cathie’s ARK under water – https://fingfx.thomsonreuters.com/gfx/mkt/klpykgjqypg/Pasted%20image%201632499826762.png)

While shares of Tesla (NASDAQ:) Inc, Wood’s top holding, are up 8% for the year, large positions in companies including Teladoc (NYSE:) Health Inc and Zoom Video Communications (NASDAQ:) Inc are down 20% or more over the same time amid a shift away from the stay-at-home technology stocks that dominated during the COVID-19 lockdowns of 2020.

ARK Invest has not responded to a request for comment.

According to Morningstar, overall, the ARK Innovation Fund has seen a decrease of 4.4% in its year-to-date. This puts it at the 100th percentile for mid-cap growth funds across the United States.

However, over the past five year the fund has grown an annualized 42.3% per year. It is now amongst the top 1 percentile of its type.

This fund’s strong performance over the long term is what has kept retail investors away from buying it this year, despite its disappointing showing. Todd Rosenbluth is director of fund research for CFRA.

He stated that while ARKK’s performance has fallen for the year and is significantly behind index-based ETFs, many investors are still loyal to it. This could be due to their fond memories of previous periods of strong performance. However, it’s becoming increasingly difficult to find alternatives as the underperformance continues.

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Mike Robinson
Mike covers the financial, utilities and biotechnology sectors for Street Register. He has been writing about investment and personal finance topics for almost 12 years. Mike has an MBA in Finance from Wake Forest University.