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It’s been two years since Cathie Wood’s ARK Invest started during the pandemic, and in the time since then, the fund has hit a big rough patch.
In 2021, the fund’s holdings in Roku, Teladoc, and Zoom fell below the value of the ETF. However, the latest market eruption has pressured the reeling firm. Ark was down more than 60% in August, fifty percentage points worse than the S&P 500.
A market rush creates too much for concentrated sites
Many people believe that, in 2021, the money manager was far too overreached on his concentrated positions in science and technology growth stocks. As meme stocks went “to the moon,” the lack of diversification caused Wood’s firm to decline.
In the latest market downturn, critics say the firm has not learned its lesson. In August, the hedge fund was still concentrated in technology growth positions. According to Ark’s most recent 13F filing, tech stocks still made up 34% of its portfolio.
Billionaires live by this basic investment rule
Before Ark’s demise, Wood had faced backlash for her contrarian views on the markets. Insiders speculate that Ark’s continued lack of diversification was another key factor in the fund’s performance.
Many alternative assets can protect investors from a similar fate, especially tangible assets that have a low correlation with ordinary shares. Real estate provides a hedge for many, but experts are currently predicting a housing recession, depending on inflation and fed interest rate hikes.
It might sound unusual. Companies make profits. Rental properties collect rent. But what is possible fine art delivery?
Well, it can provide investors with the most important thing: growth.
Contemporary art prices have outperformed S&P 500 returns by 164% over the past 25 years, according to Citi. And investing in art is very successful for diversification because it is a real physical asset that has little correlation with the stock market.
On a scale of -1 to +1, with 0 indicating no connection at all, Citi found that the correlation between contemporary art and stocks was just -.04 over the past 25 years.
Earlier this year, Bank of America chief investment executive Michael Harnett cited artwork as a sharp way to outperform over the next decade – largely because of the asset’s track record as an inflation hedge.
Fine art has long been the asset class of choice for the financial elite, and has recently been unlocked by tech entrepreneurs through companies such as Masterworks.
Masterworks’ mission is to democratize the world of art investing and help people benefit from investing previously exclusive to the super-rich. We are the only platform that allows you to invest in multi-million dollar artworks by artists such as Basquiat, Picasso, Banksy, and more.
This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investment advice.
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