In December, as investors pulled more than $15 billion out of active U.S. equity funds — and as half of the largest fund managers suffered outflows — six-year-old ARK Investment Management was having its best month yet.
Investors allocated $8.2 billion into ARK’s exchange-traded funds last month, among the highest net inflows of any U.S. fund manager, according to Morningstar’s end-of-year fund flows report. It was the culmination of a breakout year for the ETF firm founded by Cathie Wood, which grew from $3.1 billion at the end of 2019 to $34.5 billion by the end of 2020.
ARK’s December surge in assets — representing a 35 percent increase over November’s inflows — followed a year of outperformance by the firm’s actively managed ETFs, which focus on what ARK describes as “disruptive innovation.” The Morningstar report suggested that investors “might be chasing those funds’ outperformance,” as five of the firm’s six ETFs delivered “triple-digit gains in 2020 that put them at or near the top of their respective categories.”
These included the firm’s flagship ARK Innovation ETF, which benefitted as its largest holding, Tesla, soared 743 percent over the course of the calendar year. The ETF attracted about $3.14 billion in assets in December, ranking as the fifth-most-popular U.S. fund for the month.
It was closely followed by the ARK Genomic Revolution ETF, which recorded roughly $3.09 billion in net inflows. The ETF, which focuses on health care innovations including gene-based therapies, had the sixth-highest flows of any U.S. fund in December.
[II Deep Dive: Cathie Wood Still Thinks Tesla Is Going to $6,800. Why?]
Altogether, ARK ranked fifth in total U.S. fund flows, according to Morningstar. This put the ETF firm in company with asset management giants including BlackRock’s iShares. One of the largest ETF businesses in the U.S. with over $2 trillion in assets, iShares recorded $11.7 billion in net inflows in December.
“The growth of ARK ETF Trust is nothing short of impressive,” Morningstar said.
ARK, which recently struck a deal to keep founder and CEO Wood as the firm’s majority shareholder, is already looking for new ways to expand in 2021. Last week, the firm filed plans with the Securities and Exchange Commission for a new ETF targeting space exploration.
