Investors Clinging on to Cathie Wood Despite Performance Woes

‘Disruptive Technology’ topped last week’s flow receivers having pulled in USD$317 million as investors renew faith in Cathie Wood and her strategy. Meanwhile, ‘Natural Resources’ remained the second most appealing theme for investors as they try to hedge their inflation risk.

Cathie Wood Still Attractive

Themes investing in disruptive technologies proved to be appealing among global investors. ‘Disruptive Technology’ dethroned last week’s flow leader, ‘China Digitalization’, to become the top flow receiver for the week between June 13th and 17th. The theme brought in USD$317 million of investor capital. Inflows into the theme were mostly propelled by a cash influx into Cathie Wood’s crown jewel, the Arkk Ark Innovation ETF (ARKK). The Queen of The Bull Market’s research team published a report indicating that the American video telecommunications’ stock, Zoom, could reach USD1,500 by 2026 growing at a compound annual growth rate of 76%. The report included a Monte Carlo analysis simulating possible outcomes for Zoom’s stock price: a probability of 25% that the share will be USD$700 or less, and 25% that it will be worth USD$2,000 or more. Ark isn’t alone in its bullish stance on Zoom, analysts from Morgan Stanley and RBC Capital Markets also acknowledge Zoom’s potential. Ark’s view on the video telecommunication stock is reflected in its holdings with Zoom constituting the largest asset with a 10.71% weight of the total portfolio. The Arkk Ark Innovation ETF (ARKK) ended up the top flow receiver having witnessed big inflows netting USD$197 million of inflows meanwhile its Canadian cousin Emerge ARK Global Disruptive Innovation ETF (EARK) attracted USD$10 million of cash inflows over the week.

On the other side of the pacific, easing lockdown restrictions in major Chinese megacities and policymakers taking a more rational stance towards the tech sector continue to lure investors into Chinese equities. ETFs such as HSBC Hang Seng Tech UCITS ETF (HSTE), CSOP Hang Seng TECH Index ETF (3033), and CSOP Hang Seng TECH Index Daily (2x) Leveraged Product ETF (HK0000672946) managed to attract USD$45 million, USD$40 million, and USD$15 million respectively. To that end, the theme ‘China Disruptive Technology’ experienced USD$104 of net inflows over the week.

ETFs in play:

• China Disruptive Technology ETFs
• Disruptive Technology

Investors Look to Hedge Inflation Risks with Natural Resources

‘Natural Resources’ maintained its position as the second most popular investment strategy in the thematic universe, pulling in USD$307 million of net inflows spread across 3 of the 12 ETFs following the theme. The USD$7.9 billion FlexShares Morningstar Global Upstream Natural Resources Index Fund ETF (GUNR), the USD$3.5 billion SPDR S&P Global Natural Resources ETF (GNR), and the USD$221 million First Trust Indxx Global Natural Resources Income ETF (FTRI) were the top flow receivers among ETFs following the theme, having attracted USD$225 million, USD$102 million, and USD$5 million of net inflows respectively. Global investors poured money into these flow leaders in an attempt to hedge their inflation risks. These ETFs invest in oil and gas, materials, agriculture, water, and timber which are natural resources expected to do well during periods of heightened inflation and increasing rates. ’Agribusiness’, ’Strategic Metals’, ’Timber and Forestry’ and ‘Water’ are themes capturing the investment opportunity in the ‘Natural Resources’ trend but ending up with net sellers for the week. They netted USD$10 million, USD$25 million, USD$40 million and USD$4 million of outflows.

ETFs in play:

• Agribusiness ETFs
• Natural Resources ETFs
• Strategic Metals ETFs
• Timber and Forestry ETFs
• Water ETFs

Data for this article is as of June 17th, 2022.