Over the last two years, hedge fund manager Cathie Wood has been a superstar amid the tech stock and crypto hype. She was the face of the bull run. Her flagship Ark fund has shown an incredible performance thanks to her strategy to bet on high-growth, disruptive companies like Tesla. Ark Invest Innovation ETF (ARKK) smashed most of its competitors in 2020 and attracted billions of dollars from investors.
ARKK invested in the most glamorous players in tech, pharma, and crypto, a group that encompasses Tesla, Robinhood, Coinbase, Teladoc, and Block. ARKK still shows a Net Asset Value (NAU) of $71B. Its share price, however, has dropped 50% and shed 18% from the start of 2022 alone.
Warren Buffet‘s Berkshire Hathaway shares, on the other hand, have continued to climb steadily, narrowing the performance gap between Buffett’s investment conglomerate and the ARKK since the start of 2020 to just 8 percentage points.
The relative performance of the two fund managers has been particularly different this month, with Berkshire’s stock climbing around 2 percent since the start of January while Ark’s biggest ETF has slid 24 percent. ARKK has now tumbled 43 percent from the beginning of 2021 to January 21, 2022. Berkshire Hathaway is up 34 percent. Financial Times points out that Wood’s ARKK and Berkshire Hathaway are often seen “as prime examples of two very different investment styles” — growth and value, respectively. The reversal of their share prices reflects a jarring rotation between the two tribes in recent years.
The Financial Times reports that major investors are already pulling money out of ARKK. Faced with the feared end of cheap money, tech stock prices have plummeted, as have crypto prices. As a result, Warren Buffet‘s conservative strategy is back in vogue.