Cathie Wood's ARK ETFs Stabilize After Record Outflows: Report

February 24, 2021 9:15 AM EST

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Popular exchange-traded funds (ETFs) managed by Cathie Wood have stabilized today after two volatile daily trading sessions this week and record outflows.

The biggest ETF - ARK Innovation (ARKK) - is trading flat on Wednesday after it closed 5.79% lower on Tuesday. At one point, ARKK was down nearly 12% yesterday.

“Corrections are good, they keep us all humble. The strongest bull markets I’ve been in are built on walls of worry,” Wood told Bloomberg radio.

A pullback doesn’t come as a surprise as Bloomberg reports that investors withdrew $465 million from ARKK on Monday, coupled with $202 million they took from the ARK Genomic Revolution ETF (ARKG) and $119 million from the ARK Next Generation Internet ETF (ARKW). The outflow from the biggest fund was more than triple its previous record.

“It was absolutely certain that some of the money that raced in was going to be frothy performance chasing,” said Dave Nadig, chief investment officer at data provider ETF Trends.

“When the dust settles in a few days or weeks, we’ll still see Ark with an enormously bigger pile of AUM then they had say a year ago.”

Wood’s ETFs bought a further $170 million of Tesla (NASDAQ: TSLA) shares yesterday. Tesla stock price fell to $620 to close below the $700 mark for the first time this year. Shares of the EV giant account for about 10% of the fund.

As much as $5 billion of ARK Innovation shares changed hands yesterday. Moreover, the investment company also sold $126 million of Taiwan Semiconductor's U.S.-listed shares.

“We love the liquidity that this provides us, we think it’s very healthy, a very healthy shakeout. All I know is we are keeping our eyes on the prize and the prize just got a little bit more interesting,” Wood said.

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