Investors who bought stocks during the COVID-19 market crash in 2020 have generally experienced some big gains in the past two years. However, some big-name stocks performed much better than others since the pandemic bottom.
ARKK's Bumpy Road: Even investors who took a conservative, diversified approach to the market in the last two years have generally made nice returns on their investment at this point.
In 2019, the SPDR S&P 500 ETF Trust SPY generated an extremely strong 31.2% total return, but the ARK Innovation ETF ARKK topped it with a 35.5% total return.
During the 2020 pandemic, many high-growth stay-at-home stocks soared, and ARK CEO and Chief Investment Officer Cathie Wood became extremely popular among the new wave of young retail traders.
Pandemic Sell-Off: The ARKK fund started 2020 on a high note, rising from around $50.64 to start the year to a pre-pandemic high of $60.73 in mid-February. Unfortunately, over the next several weeks the bottom completely fell out of the market thanks to the COVID-19 pandemic.
The ARKK ETF plummeted as low as $33 on March 18, 2020, and the S&P 500 bottomed just five days later. At the time, investors had no idea March 23 would mark the end of the shortest bear market in U.S. history at just 33 days in duration.
By April 14, the ARKK was back above $50. By May 19, the fund was back at new all-time highs, but the rally certainly didn’t stop there. The combination of Federal Reserve interest rate cuts, unprecedented government stimulus measures and a virus mortality rate that was much better than initially feared sent growth stock prices skyrocketing.
Wood's Falling Star: Two brief tech stock sell-offs in September and October 2020 were mere bumps in the road for the ARKK in the march to all-time highs of $159.70 in February 2021. Unfortunately, while the broad market rally continued on to new all-time highs, many of ARKK’s top holdings suffered significant pullbacks, and the ARKK fund has completely tanked.
By the end of 2021, the ARKK fund was back below $90, and it was the single worst-performing U.S. equities ETF under Morningstar coverage in the first quarter of 2022 as investors rotated out of risk assets and into defensive investments.
The ARKK fund subsequently dropped as low as $35.10 in May 2022 before bouncing back a bit to $42.59 today.
Still, investors who bought the ARKK ETF the day it hit its 2020 pandemic low and held on have generated a positive return at this point. In fact, $1,000 in ARKK shares bought on March 18, 2020, would be worth about $1,228 today.
Looking ahead, Wood is still betting on high-growth tech stocks to outperform the market in the next year. Top ARKK holdings currently include Tesla Inc TSLA, Zoom Video Communications Inc ZM and Roku Inc ROKU.
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