ARKK ETF stock: Is Cathie Wood’s flagship fund a buy today?

Cathie Wood’s Ark Innovation Fund (ARKK) stock price is doing well this year, and it recently jumped to the highest level since 2022 as technology companies thrived. The ARKK ETF stock was trading at $79.72, up by 106% from its lowest level this year. 

ARKK ETF shenanigans are continuing

Cathie Wood’s ARKK ETF has gone through what the FT has called shenanigans in the past few weeks. Data compiled by ETF.com shows that the fund had over $3.2 billion in inflows last week, up sharply from almost zero a week before that.

ARKK ETF inflows and outflows

The ETF had a similar surge in August when the assets jumped by over $2.7 billion. According to the FT, the surge in assets was because of the huge Initial Public Offering (IPO) that happened recently.

The first time the fund saw a spike in inflows was before the Circle IPO, which was one of the most successful ones this year. It then had an inflows surge before the Figma and Bullish IPOs, and then the assets cratered by $2.7 billion a week later.

The recent surge in assets was linked to the two major IPOs that happened last week: Klarna and Gemini. Interestingly, the surge happened even though ARKK ETF did not participate in these funds.

The surge of inflows in an ETF like ARKK before a major IPO is known as ‘creations’ and ‘redemptions’, which allows the fund to reflect the value of its holdings. 

As such, the investors who bought the shares last week are unlikely to see a profit as they did in the last periods as the fund did not have any stakes in the companies that went public last week.

Is ARKK a good investment today?

The ARKK ETR came into prominence during the pandemic as its holdings ballooned, which made it one of the top-performing funds in Wall Street.

This situation reversed afterwards as inflation jumped, pushing the Federal Reserve to hike interest rates to the highest level in decades.

Recently, however, the ARKK ETF stock price has rebounded as most holdings in its portfolio have jumped. For example, Tesla stock price has rebounded recently and erased the losses made earlier this year.

Coinbase, its second-biggest holding, has benefited from the ongoing performance of cryptocurrencies and its growing role in the stablecoins and custody services.

Roku, the third-biggest constituent in the fund, has jumped to the highest point since February as its business improved.

The other top companies in the ARKK ETF are Tempus AI, Shopify, Robinhood, Palantir, and AMD.

So, is ARKK better than popular passing funds like QQQ and VOO? One of its shortcomings is that it has an expensive expense ratio of about 0.75%, much higher than the QQQM ETF, which costs 0.15% and the Vanguard S&P 500 ETF (VOO), which charges just 0.03%.

An expensive fund should compensate this with its strong and low-volatile returns over time. 

Data shows that the ARKK ETF stock has had a total return of minus 11% in the last five years, while the QQQM and VOO ETFs have gained by 107% and 103%, respectively in the same period.

ARKK fans will point to the fact that it has beaten these funds by far this year, as it rose by 40% compared to their returns of less than 20%. 

ARKK ETF stock price analysis 

The weekly timeframe chart shows that the ARKK ETF stock has rebounded in the past few years, moving from a low of $29.59 in 2023 to $80 today.

It has recently moved above the upper side of the ascending channel pattern and formed a bullish flag pattern. It also formed a golden cross pattern as the 50-week and 200-week Exponential Moving Averages (EMA) crossed each other.

Therefore, the stock will likely continue rising as bulls target the psychological level at $100, which is about 25% above the current level. In the long term, the fund may jump and retest the all-time high at $157, up by 100% from the current level.

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