Despite Tesla's Raging Success, Cathie Wood's ARKK ETF Is Still Down 2% On The Year

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by Tyler Durden
Tuesday, Oct 26, 2021 - 08:50 AM

There's no doubt that Tesla has been the story this week. The stock rocketed higher by more than $100 per share - or several Ford market caps - on Monday to open the week following an MS upgrade and news that Hertz would be buying 100,000 vehicles from the automaker.

But even this meteoric rise hasn't been enough to keep Cathie Wood's flagship ARKK ETF ahead of the S&P 500 so far this year. 

Despite the fact that Tesla makes up 10% of the $21 billion ETF and that Tesla is up 45% this year, ARKK is still down by about 2% so far in 2021, according to Bloomberg.

The inability to outperform the market can be attributed to 34 of ARKK's 46 holdings falling since early August, Bloomberg data showed. Names like Roku and Zoom have weighed the heaviest on the ETF's performance, once again proving exactly how integral Tesla has been to Wood's success. 

Meanwhile, as we have noted, Wood has been selling Tesla on the way up, reducing her firm's exposure to the name as it has grown in size. 

Matt Maley, chief market strategist for Miller Tabak + Co., commented: “Teladoc, Roku, Zoom, Zillow, etc -- they’ve all performed quite poorly. It shows that the continued rally in the big innovation stocks is really starting to narrow quite a bit.”

Despite the poor performance in 2021, ARKK is still up about 500% since 2016. Almost all of the ETF's profound success has been a result of Tesla growing more than 10x in size over the last 24 months. 

Maley says that other parts of Wood's portfolio may still have further to stumble. He concluded: “A lot of these innovative stocks got an extra boost from the Fed’s massive stimulus program. Investors realize that the Fed is going to pare back.”