ARK Innovation ETF (ARKK) - Get ARK Innovation ETF Report shares extended declines Tuesday, pulling the flagship investment vehicle of star fund manager Cathie Wood to the lowest levels since November, as the rout in global tech stocks continued for a second consecutive session.
Wood, who told CNBC in early March that she was becoming "more optimistic" about her portfolios amid the opening days of the ongoing tech selloff - which had tipped the Nasdaq Composite into correction territory at the time - has seen the value of her flagship ARK Innovation fund tumble 35% from its late February peak.
Launched in 2014, the Ark Innovation ETF is an actively-managed fund that focuses on global companies that are set to disrupt their sectors through tech-lead innovation.
Tesla (TSLA) - Get Tesla Inc. Report, the fund's biggest holding at 10.5%, is down nearly 11% for the year. Teladoc Health (TDOC) - Get Teladoc Health Inc. Report, ARK's second largest holding, is down 29.5% while while Roku (ROKU) - Get Roku Inc. Report, one of the stocks Wood has been adding exposure to during the sell-off, is down 9.2%.
Tech stocks are notably sensitive to interest rate hikes, given that their growth 'payoff' is often further into the future than traditional equities. This makes them less attractive, on a relative basis, when interest rates rise, as investors can get better near-term returns with less risk.
And with market-based inflation gauges trading at the highest levels in ten years, and tomorrow's key reading of April CPI likely to show a headline rate of 3.6%, interest rate traders are poised for another leg higher in Treasuries that could trigger even deeper declines for tech-focused benchmarks.
Earlier this week, Wood sold around a third of Ark's stake in Apple (AAPL) - Get Apple Inc. Report, with the stock down around 4.7% for the year at the time, along with the U.S.-listed shares of Swiss drugmaker Roche AG (RHHBY) and China tech giant Baidu (BIDU) - Get Baidu Inc. Report .
Investors are also pulling cash out of the fund, according to data from ETF.com, with $760.91 million exiting Ark Innovation last week, compared to an overall increase of $15.3 billion for the broader ETF sector
Data from Bank of America's weekly 'Flow Show' report suggests investors are using last week's equity market pullback to put cash back into stocks, with $18.3 billion finding its way into global portfolios, taking the year-to-date total to a record $456 billion, as both the Dow and the S&P 500 closed at record highs.
ARK Innovation ETF shares were marked 2.9% lower in early trading Tuesday to change hands at $101.24 each, after trading as low as $98.89 earlier in the session.