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ETF Focus Report Master - ETF FACT CARD_EQ-page-001

The ARK Innovation ETF (ARKK) has about as much negative sentiment surrounding it today as any investment you'll find on Wall Street. 1-year returns of -56% will do that for you, but we may be seeing a bit of a turning of the corner in terms of investors willing to test out the waters again.

If you look at ARKK among thematic ETFs (as categorized by ETF Action), it has seen the 2nd largest net inflows over the past 1-month period.

ETF Focus Report Master - THEMATIC TOP FLOWS REPORT-2-page-001

To hear the financial news, you'd be surprised if there were any investors sticking around in ARKK, but the numbers don't lie. Granted, this is a small relative amount of money moving into ARKK (just over 2% of total assets), but it could be an early sign that investors are looking for a bottom here.

I want to be a little careful about over-interpreting a single data point. You can see above that ARKK has still seen over $1 billion in net outflows over the past year and has seen net inflows in just 2 of the past 8 months - a modest $53 million inflow in October 2021 and a scant $4 million in January 2021. Clearly, momentum isn't on ARKK's side, but it's about the best short-term run in terms of flows this fund has seen since June of last year.

Another caveat is the fund that appears at #4 on the above list - the Tuttle Short Innovation ETF (SARK), which is the short version of ARKK. It's seen a lot of money since its debut as well and that interest hasn't necessarily waned. Also worth noting is that three other ARK ETFs appear on the biggest outflow list over the past month, so this could very well be a short-term phenomenon.

Still, it's an interesting development. ETF flows tend to follow performance, so I don't expect any kind of big movement until ARKK moves well off of its 52-week lows. Even then, Cathie Wood has become a very polarizing figure in the markets and I imagine there's a good chunk of investors who won't return no matter what.

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