Why the disdain for managed funds like ARKK that destroy total market funds?

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Brianmcg321
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Brianmcg321 »

Mountain Doc wrote: Mon May 10, 2021 5:36 pm This thread is another amazing example of why chasing recent performance is so dangerous. This thread was literally started at the VERY top for ARKK, and since then it is down 34% while VTI is up 4%.
Where did OP go?
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by SuperXmas »

What could possibly go wrong with a levered, momentum trade with a portfolio comprised of illiquid, unprofitable tech stocks?
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by firebirdparts »

She's going to need to keep a stiff upper lip today.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by TomatoTomahto »

Brianmcg321 wrote: Mon May 10, 2021 7:34 pm
Mountain Doc wrote: Mon May 10, 2021 5:36 pm This thread is another amazing example of why chasing recent performance is so dangerous. This thread was literally started at the VERY top for ARKK, and since then it is down 34% while VTI is up 4%.
Where did OP go?
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by bugleheadd »

Buy high sell low
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by flyfishers83 »

Talk about timing and an unfortunate subject. 3 months is but a blip, but it's been brutal. I saw a quick snip of an article this morning suggesting that half of all investment in ARKK is underwater. Huge rush up to the top.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by rich126 »

flyfishers83 wrote: Tue May 11, 2021 9:32 am Talk about timing and an unfortunate subject. 3 months is but a blip, but it's been brutal. I saw a quick snip of an article this morning suggesting that half of all investment in ARKK is underwater. Huge rush up to the top.
Obviously investing in stuff like this isn't for most Bogleheads but to me it has a place and time. Once it became so popular, it was pretty clear the easy money was gone and a correction (maybe permanent) was due.

And funds like this get hit badly because people panic and sell, especially since many did not participate in the huge runup in 2020. And the fund has to sell and doesn't have money to buy "low" (although in this case I'm not sure I'd be buying at this point).

Lots of stuff this year isn't looking so hot. Even big name stocks like Amazon is down for the year (I believe) while the old timer who was out of touch with the market is lapping the field this year. I'm referring to Buffet and Berkshire.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by MarkRoulo »

jeffh19 wrote: Mon May 10, 2021 12:58 pm I didnt read the entire thread, and I like the idea of ARK funds, as investing in sectors that we think are gonna have a lot of big growth in the future. I dont own any, but I cant say it hasn't crossed my mind. but:
...
I think its an interesting discussion for sure, I do think these sectors will perform well in the future. Time will tell.
To be sure I understand your last sentence.

You believe that the *STOCKS* of companies in these sectors (e.g. Tesla) will outperform Total Stock Market in the future? Not that the *companies* will see superior growth in metrics such as revenue or profits, but that the STOCKS will also outperform?
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by hnd »

I'm in a few fb groups and so many people bought into Morgan Stanley, Virtus, ARK, Lord Abbot (all had funds that did well over 100% in 2020). like their entire portfolios moved into these funds. and literally the past 24 hours many of them are posting, scratching their heads, "did i make a mistake?" contemplating whether they should sell or not! none of those products are even at half the markets return YTD. some are in the red.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Astones »

hnd wrote: Tue May 11, 2021 10:00 am like their entire portfolios moved into these funds. and literally the past 24 hours many of them are posting, scratching their heads, "did i make a mistake?" contemplating whether they should sell or not! none of those products are even at half the markets return YTD. some are in the red.
Peter Lynch discussed this uncertainty about what to do when prices go down in a conference. He made the case that the problem of most people is that they buy without knowing why.
When you buy without knowing why, then when the price goes down you don't know what to do.
He really nailed it on this.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by hnd »

Astones wrote: Tue May 11, 2021 10:07 am
hnd wrote: Tue May 11, 2021 10:00 am like their entire portfolios moved into these funds. and literally the past 24 hours many of them are posting, scratching their heads, "did i make a mistake?" contemplating whether they should sell or not! none of those products are even at half the markets return YTD. some are in the red.
Peter Lynch discussed this uncertainty about what to do when prices go down in a conference. He made the case that the problem of most people is that they buy without knowing why.
When you buy without knowing why, then when the price goes down you don't know what to do.
He really nailed it on this.
he's not wrong. one guy posted his 4 or 5 funds he purchased. a few morgan stanley funds and arkk. i was basically like the 3 MS funds you bought each have 30 stocks in them. or 120 stocks. however you really only own like 70 individual stocks of them because all 4 funds own 20 of your top 50 stocks and 3 of them own the other 30. the company he was the most invested in? Fastly. a CDN company. the guy was like whaaaaaaaat? basically you took a chunk of money, who knows how much, enough to buy a car? to buy a house? and just blindly bought that car/house without ever looking at any of the details of that vehicle/building.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by txhill »

I have no skin in the game but I really hope ARKK takes off again just to pour some water on the schadenfreude going on here.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Astones »

txhill wrote: Tue May 11, 2021 10:22 am I have no skin in the game but I really hope ARKK takes off again just to pour some water on the schadenfreude going on here.
While the Schadenfreude is childish, it's also true that this is the result of a general unresolved problem: only funds that outperform are advertised. Since this is done consistently, people tend to fall into the trap of believing that outperforming is easier than what it actually is. These moments of truth are rather healthy over the long run. It's a reminder that making money is not as easy as it looks sometimes.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Thesaints »

txhill wrote: Tue May 11, 2021 10:22 am I have no skin in the game but I really hope ARKK takes off again just to pour some water on the schadenfreude going on here.
Yes, ARKK will very likely take off again, and plunge again, until it is liquidated. The point is that there is no reason why it should provide substantially higher returns than the stock market. And by "substantially" I mean the returns typical of winning bets in the pre-IPO environment.
What is certain is that Ms. Wood gets 0.75% for a fund that should arguably pay no more than a third of that.
Last edited by Thesaints on Tue May 11, 2021 3:53 pm, edited 1 time in total.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by TomatoTomahto »

txhill wrote: Tue May 11, 2021 10:22 am I have no skin in the game but I really hope ARKK takes off again just to pour some water on the schadenfreude going on here.
Schadenfreude? Hell, I was gonna put some of our play money into this. As my son reminds me (he’s the one who talked me out of it), I picked ARKK’s top about to the day! I am considering offering my services as a contrarian indicator.

My joy is not at someone else’s misfortune, but at my own narrowly dodged bullet.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by txhill »

Astones wrote: Tue May 11, 2021 10:31 am
txhill wrote: Tue May 11, 2021 10:22 am I have no skin in the game but I really hope ARKK takes off again just to pour some water on the schadenfreude going on here.
While the Schadenfreude is childish, it's also true that this is the result of a general unresolved problem: only funds that outperform are advertised. Since this is done consistently, people tend to fall into the trap of believing that outperforming is easier than what it actually is. These moments of truth are rather healthy over the long run. It's a reminder that making money is not as easy as it looks sometimes.
Yeah I suppose you're right.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by hnd »

Astones wrote: Tue May 11, 2021 10:31 am
txhill wrote: Tue May 11, 2021 10:22 am I have no skin in the game but I really hope ARKK takes off again just to pour some water on the schadenfreude going on here.
While the Schadenfreude is childish, it's also true that this is the result of a general unresolved problem: only funds that outperform are advertised. Since this is done consistently, people tend to fall into the trap of believing that outperforming is easier than what it actually is. These moments of truth are rather healthy over the long run. It's a reminder that making money is not as easy as it looks sometimes.
the other issue is that most of the people that had skin in the game won't be around as based on the outflows they no longer have any skin in the game! they've moved onto the next high flying product.

but yes the reason these products are even known is because of their past performance. if they weren't performing, the managers wouldn't be on podcasts, cnbc, etc etc and their products would not be at the top of every screener you ran. Its also like SPIVA persistence information doesn't exist. even if you know it exists. this time is always different. I told a guy that you have an 11% chance of a fund that was in the top half of like equity funds to repeat being in the top half. the next 5 years. "so your telling me theres a chance" basically is what he said.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Astones »

hnd wrote: Tue May 11, 2021 11:53 am the other issue is that most of the people that had skin in the game won't be around as based on the outflows they no longer have any skin in the game! they've moved onto the next high flying product.

but yes the reason these products are even known is because of their past performance. if they weren't performing, the managers wouldn't be on podcasts, cnbc, etc etc and their products would not be at the top of every screener you ran. Its also like SPIVA persistence information doesn't exist. even if you know it exists. this time is always different. I told a guy that you have an 11% chance of a fund that was in the top half of like equity funds to repeat being in the top half. the next 5 years. "so your telling me theres a chance" basically is what he said.
Exactly, so if the ARKK will keep dropping, after few days of drama Cathy Wood will be forgotten, but then media will start celebrating a new hero of the moment, who has a solid 3 years record of good returns, and people will be like "he/she really gets it. This time is different" and the loop starts again.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by surfstar »

txhill wrote: Tue May 11, 2021 10:22 am I have no skin in the game but I really hope ARKK takes off again just to pour some water on the schadenfreude going on here.
I guess even divinely inspired managers have trouble always being right.

Wait until the crypto crash before you worry about schadenfreude :twisted:
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by sureshoe »

jeffh19 wrote: Mon May 10, 2021 12:58 pm I didnt read the entire thread, and I like the idea of ARK funds, as investing in sectors that we think are gonna have a lot of big growth in the future. I dont own any, but I cant say it hasn't crossed my mind. but:

I'm pretty sure I read Cathie Wood wasn't that successful or had some failed ventures/investment firms before. Confirm this yourself, but I've seen a few people point out her less than stellar track record for quite some time before ARK.

She is heavy into Tesla. 10% in most funds, and I think they redid the fund prospectus so they can hold more than 10% of a single stock to hold more Tesla. We all know Tesla's P/E ratio is crazy high, so you're counting on Tesla to continue to go parabolic past what its already done. As a former Tesla owner, someone who loved it and would love to have another, I feel the FSD/robo-taxi thing is a LONG LONG way away if it ever happens. Thats not really as much of a knock on Tesla as it comes off too. Even if Tesla accounts for an infinite amount of situations that can happen in the world on the road for an infinite amount of time, I dont think I see the government quick to approve driverless cars either. Thats an entirely different discussion. I do feel like a lot of Elon/Tesla is marketing/Elon speak about potential. I also think he's a genius and a pioneer and so on. People seem to include Space X, Neuralink, Starlink under teh Tesla umbrella but I dont think thats factual at all as far as $$$. You're counting on so many things and ht market to do what you want. There was a strong rumor last week Tesla is already sold out of all production capability for Q2 already, and the stock went down over 2% that day. They dont make much from selling cars, talks are they cant rely on selling energy credits forever. Selling cars is a hard business to be in and make money. They are investing a ton into their product and company though and they are a company like Apple where the brand is extremely strong. Speaking of Apple, an Apple EV in 5-10 years could take a major bite out of Tesla too. Who knows, I sure dont.

Speaking of Tesla and all, how much of her returns and performance are simply from Tesla going parabolic? How would her portfolios do without it? Obviously she gets credit for picking Tesla and riding that wave, but any fund that held a lot of Tesla the last couple years has probably done very well, and its not like its some hidden stock few investors knew about.

While It seems so obvious that these tech/automation/ai/space things are so heavily the future too. Thats what lures me in. I've read people on here I think it was say that they are in the AI biz for their career and disagree with the companies she's invested in too. Do a search on here to get more opinions.

Automatically deduct their much higher expense ratios and if the market tanks, her stocks might take a much bigger hit.

You want to talk returns....look at this year. ARKK today is down 4.5% and down about -11% for the year, while VTI/VTSAX is up about 12% for the year. You never ever know, which is also why total market funds should at least be the core of your portfolio. I dont think theres anything wrong with throwing some money on the side in if you really believe in it.

I think its an interesting discussion for sure, I do think these sectors will perform well in the future. Time will tell.
This is the narrative for a lot of "oracle" investors. They pick a lot of stocks. Naturally they are going to, at some point, have a couple winners. What ends up happening is some of these investors hit a couple big winners in a row and now are "geniuses".

The jury is out.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by sureshoe »

SuperXmas wrote: Tue May 11, 2021 8:54 am What could possibly go wrong with a levered, momentum trade with a portfolio comprised of illiquid, unprofitable tech stocks?
It could make too much money and you have to pay too much tax.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by runninginvestor »

hnd wrote: Tue May 11, 2021 10:18 am
Astones wrote: Tue May 11, 2021 10:07 am
hnd wrote: Tue May 11, 2021 10:00 am like their entire portfolios moved into these funds. and literally the past 24 hours many of them are posting, scratching their heads, "did i make a mistake?" contemplating whether they should sell or not! none of those products are even at half the markets return YTD. some are in the red.
Peter Lynch discussed this uncertainty about what to do when prices go down in a conference. He made the case that the problem of most people is that they buy without knowing why.
When you buy without knowing why, then when the price goes down you don't know what to do.
He really nailed it on this.
he's not wrong. one guy posted his 4 or 5 funds he purchased. a few morgan stanley funds and arkk. i was basically like the 3 MS funds you bought each have 30 stocks in them. or 120 stocks. however you really only own like 70 individual stocks of them because all 4 funds own 20 of your top 50 stocks and 3 of them own the other 30. the company he was the most invested in? Fastly. a CDN company. the guy was like whaaaaaaaat? basically you took a chunk of money, who knows how much, enough to buy a car? to buy a house? and just blindly bought that car/house without ever looking at any of the details of that vehicle/building.
Hey this is what's happening in the real estate market in some llocations. Buying sight unseen, waiving contingencies/inspections
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by JonnyDVM »

TomatoTomahto wrote: Tue May 11, 2021 10:36 am
txhill wrote: Tue May 11, 2021 10:22 am I have no skin in the game but I really hope ARKK takes off again just to pour some water on the schadenfreude going on here.
Schadenfreude? Hell, I was gonna put some of our play money into this. As my son reminds me (he’s the one who talked me out of it), I picked ARKK’s top about to the day! I am considering offering my services as a contrarian indicator.

My joy is not at someone else’s misfortune, but at my own narrowly dodged bullet.
Maybe not you, but it's clear that many of our fellow Bogleheads are enjoying a victory lap at my (and OPs) expense. It's fine, yuck it guys you earned it. Even I can't argue with the comedic timing of OP's post coinciding with the ARKK top. I'm looking forward to posting in July about how I'm now long so I can officially take my profit without the big tax hit :D
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by mr_brightside »

yes this thread didn't age well -- ouch

Target Date Funds, anyone ?? :happy

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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Californiastate »

JonnyDVM wrote: Tue May 11, 2021 12:32 pm
TomatoTomahto wrote: Tue May 11, 2021 10:36 am
txhill wrote: Tue May 11, 2021 10:22 am I have no skin in the game but I really hope ARKK takes off again just to pour some water on the schadenfreude going on here.
Schadenfreude? Hell, I was gonna put some of our play money into this. As my son reminds me (he’s the one who talked me out of it), I picked ARKK’s top about to the day! I am considering offering my services as a contrarian indicator.

My joy is not at someone else’s misfortune, but at my own narrowly dodged bullet.
Maybe not you, but it's clear that many of our fellow Bogleheads are enjoying a victory lap at my (and OPs) expense. It's fine, yuck it guys you earned it. Even I can't argue with the comedic timing of OP's post coinciding with the ARKK top. I'm looking forward to posting in July about how I'm now long so I can officially take my profit without the big tax hit :D
A fool and his money are soon parted. Don't be the fool.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by SuperXmas »

sureshoe wrote: Tue May 11, 2021 12:30 pm
SuperXmas wrote: Tue May 11, 2021 8:54 am What could possibly go wrong with a levered, momentum trade with a portfolio comprised of illiquid, unprofitable tech stocks?
It could make too much money and you have to pay too much tax.
That depends on when you got it. Hasn’t worked out so well in 2021. It’s really just a lazy levered trade. She certainly hasn’t demonstrated she’s “one of the great investors of our time” as Cramer frequently says.
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Anyone investing in ARKK since it was first mentioned here is now behind VTI

Post by nisiprius »

I don't know a definitive way to search for postings by date, but I think the first mention of the ARK funds in this forum was made on October 5th, 2020: Is now the time to think about active investing?

Anybody who invested in ARKK after October 5th, 2020, now has less money than they would have had if they had put it into the Vanguard Total Stock Market Index Fund, VTI.

Source

Image

In order to have beaten VTI, a buy-and-hold investor would have had to invest in ARKK before October 5th, 2020. Obviously that was possible, but I don't think very many people had heard of it before then.

Did any readers of this posting buy ARKK before October, 2020?
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Re: Anyone investing in ARKK since it was first mentioned here is now behind VTI

Post by langlands »

nisiprius wrote: Tue May 11, 2021 5:35 pm I don't know a definitive way to search for postings by date, but I think the first mention of the ARK funds in this forum was made on October 5th, 2020: Is now the time to think about active investing?

Anybody who invested in ARKK after October 5th, 2020, now has less money than they would have had if they had put it into the Vanguard Total Stock Market Index Fund, VTI.

Source

Image

In order to have beaten VTI, a buy-and-hold investor would have had to invest in ARKK before October 5th, 2020. Obviously that was possible, but I don't think very many people had heard of it before then.

Did any readers of this posting buy ARKK before October, 2020?
There's a mention of ARKQ in June 2017.
viewtopic.php?t=221966
Incidentally, I believe that poster did quite well with TSLA in 2020 (Net worth progression thread), so did seem to follow through with this conviction.

Looking more closely, you actually posted in that thread, haha... :D

Certainly it was discussed a lot more once its price started going parabolic and I doubt many on this forum rode that train to any significant extent. By definition, the average investor must reap the average return.

I'm not sure comparing the performance of VTI vs. ARKK over a short period (since Oct. 2020) is very convincing though. There are strong theoretical reasons to prefer VTI over ARKK and most people on this forum who still decide to buy some ARKK are likely doing so with full knowledge of those arguments.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Thesaints »

ARKK is a lottery ticket, but an expensive one.
It doesn't take 0.75%/yr. to invest in Tesla, et sim. and Ms. Wood does not have any special insight that makes her more likely to be able to tell a high volatility listed issue that succeeds from one that fails.

There might absolutely be good reasons for an investor to seek riskier vehicles, but ARKK is not a good choice.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Paradise »

I don't get why people invest in stocks that they can't own for life when there is so much play you can have even with VTI buying dips with bond conversions. That way you're feeding the itch to juice your gains on a stock that you can actually hold onto forever.
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Re: Anyone investing in ARKK since it was first mentioned here is now behind VTI

Post by nisiprius »

langlands wrote: Tue May 11, 2021 6:03 pmThere's a mention of ARKQ in June 2017.
viewtopic.php?t=221966
Incidentally, I believe that poster did quite well with TSLA in 2020 (Net worth progression thread), so did seem to follow through with this conviction.

Looking more closely, you actually posted in that thread, haha... :D
You're right. Blush. And for the record, other ETFs mentioned in that thread included XT, BOTZ, and ROBO. Starting in June 2017, XT, BOTZ, and ROBO roughly tied VTI and ARKQ far outperformed all the rest.

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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by TheoLeo »

One thing I think is important about Ark funds is, that they are not designed to outperform on a risk adjusted basis or even outperform at all. This is obvious because:
1. They dont control inflows at all
2. They dont keep strategic cash positions
3. They focus on a narrow subset of the market

So these funds are simply a tool to get exposure to a specific sector. It is the individual investors job to figure out if this sector or selection of stocks is fairly valued or not. In the beginning of the year Cathy Wood basically advised investors to take profits in an interview. I thought that was fair and consistent with how her fund is designed.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by SuperXmas »

TheoLeo wrote: Tue May 11, 2021 9:12 pm One thing I think is important about Ark funds is, that they are not designed to outperform on a risk adjusted basis or even outperform at all. This is obvious because:
1. They dont control inflows at all
2. They dont keep strategic cash positions
3. They focus on a narrow subset of the market

So these funds are simply a tool to get exposure to a specific sector. It is the individual investors job to figure out if this sector or selection of stocks is fairly valued or not. In the beginning of the year Cathy Wood basically advised investors to take profits in an interview. I thought that was fair and consistent with how her fund is designed.
Last edited by SuperXmas on Wed May 12, 2021 7:27 am, edited 1 time in total.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by langlands »

SuperXmas wrote: Tue May 11, 2021 9:44 pm
TheoLeo wrote: Tue May 11, 2021 9:12 pm One thing I think is important about Ark funds is, that they are not designed to outperform on a risk adjusted basis or even outperform at all. This is obvious because:
1. They dont control inflows at all
2. They dont keep strategic cash positions
3. They focus on a narrow subset of the market

So these funds are simply a tool to get exposure to a specific sector. It is the individual investors job to figure out if this sector or selection of stocks is fairly valued or not. In the beginning of the year Cathy Wood basically advised investors to take profits in an interview. I thought that was fair and consistent with how her fund is designed.
You forgot that they are levered. So any moves will be amplified. That also assumes they can manage that leverage adequately.
What? The ARK funds just buy stocks. They are not levered.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by thenextguy »

In case anyone is curious, someone did a deep dive on Wood's money management career over on Reddit.

https://old.reddit.com/r/investing/comm ... r_20_year/

I thought it was interesting to read.
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Re: Anyone investing in ARKK since it was first mentioned here is now behind VTI

Post by hnd »

nisiprius wrote: Tue May 11, 2021 5:35 pm Did any readers of this posting buy ARKK before October, 2020?
i put .3% of my portfolio into ARKK in august 2020. I put another .2% in at what i'd hoped was the bottom in late march. the earlier position i'm still up over 30% and the new position is down about 18%.
hnd
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by hnd »

https://www.reddit.com/r/investing/comm ... r_20_year/

This is a pretty good dive into Cathie Wood and her track record.
Quick summary

She has a long history of running funds that fit under "discovery growth" or "global thematic" styles.

Cathie has a great track record outperforming the S&P 500, but much of this has been due to outperformance of growth style. Also, this assumes you catch the very early cycles of her outperformance.

When compared to category style, almost all of Cathie's major outperforming years come during special periods in the market cycle, particularly in the periods following a market crash. With one other period of great performance during the 2017 BTC bubble craze**.**

Outside of those special events, Cathie's funds generally underperform equivalent style peers on a year-by-year basis.

She has a history of leaving a fund during or following a period of underperformance, then "rebooting" in another fund. This includes a short stint in a hedge fund that lost over 80% of it's AUM.
SlowMovingInvestor
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by SlowMovingInvestor »

Portfolio: 50% DOGE, 10% SPACs, 10% Frozen OJ futures, 10% MOON ETF, 10% NFTs , 5% FOMO ETF, 5% New Jersey Delis with $100M market cap :)
hi_there
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by hi_there »

hnd wrote: Wed May 12, 2021 10:27 am https://www.reddit.com/r/investing/comm ... r_20_year/

This is a pretty good dive into Cathie Wood and her track record.
Quick summary

She has a long history of running funds that fit under "discovery growth" or "global thematic" styles.

Cathie has a great track record outperforming the S&P 500, but much of this has been due to outperformance of growth style. Also, this assumes you catch the very early cycles of her outperformance.

When compared to category style, almost all of Cathie's major outperforming years come during special periods in the market cycle, particularly in the periods following a market crash. With one other period of great performance during the 2017 BTC bubble craze**.**

Outside of those special events, Cathie's funds generally underperform equivalent style peers on a year-by-year basis.

She has a history of leaving a fund during or following a period of underperformance, then "rebooting" in another fund. This includes a short stint in a hedge fund that lost over 80% of it's AUM.
Reminds me of a report I read some time ago that ranked sell side stock analysts by accuracy of their predictions, and for some reason, the top ranked analysts were all in the tech sector. The reason was that sell side analysts have a positive bias on their coverage (something like 80% of stocks have a positive rating). So, the most "accurate" analysts were simply the ones that covered the best performing sector at the time.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by jeffh19 »

MarkRoulo wrote: Tue May 11, 2021 9:48 am
jeffh19 wrote: Mon May 10, 2021 12:58 pm I didnt read the entire thread, and I like the idea of ARK funds, as investing in sectors that we think are gonna have a lot of big growth in the future. I dont own any, but I cant say it hasn't crossed my mind. but:
...
I think its an interesting discussion for sure, I do think these sectors will perform well in the future. Time will tell.
To be sure I understand your last sentence.

You believe that the *STOCKS* of companies in these sectors (e.g. Tesla) will outperform Total Stock Market in the future? Not that the *companies* will see superior growth in metrics such as revenue or profits, but that the STOCKS will also outperform?
Oh hell I have no clue, which is why I do VTI. I just think there is gonna be a ton of innovation and development and growth in those areas. Its important to know that doesnt automatically translate to $$$ though because its like a 3rd party risk with the actual company. You're counting on the company to do stuff right, have good products and actually manage the business/$ part well. I dont know who's gonna be better at that than others. On top of that like I think I said I read maybe here and maybe even in this thread, I've seen people in the actual space fairly strongly disagree with the companies she's speculating on. Who knows? Not me.

I often seriously joke that I'm in the sweet spot of intelligence. I'm just smart enough to know that I dont know the answers. :D Thats why I'm all VTI for stocks. I do Bitcoin too.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Northern Flicker »

Bwlonge wrote: Sat Feb 13, 2021 6:52 pm I've been looking into the ARK ETFs and this forum is a place I tend to look for financial opinions.

The posts I've seen here, unsurprisingly, have negative sentiments toward ARK funds. Bogleheads are happy to have money in passive low ER funds. I followed that advice for a while but it ended up leaving a ton of money on the table.

Pre-pandemic, 2015-2020, QQQ out performed VTI 117% to 60%. ARKK outperformed VTI 161% to 60%.

What am I missing here? For a 401k or IRA that's going to sit for 30 years, is the total market fund advice really relevant anymore?

By following traditional advice to get the cheapest total market fund, it has ended up costing people thousands of dollars more in opportunity cost.
Since the original posting, the total market is up about 1.4%, and ARKK is down about 35%.

http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D
Last edited by Northern Flicker on Thu May 13, 2021 4:46 pm, edited 1 time in total.
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by mervinj7 »

Northern Flicker wrote: Thu May 13, 2021 4:23 pm
Bwlonge wrote: Sat Feb 13, 2021 6:52 pm I've been looking into the ARK ETFs and this forum is a place I tend to look for financial opinions.

The posts I've seen here, unsurprisingly, have negative sentiments toward ARK funds. Bogleheads are happy to have money in passive low ER funds. I followed that advice for a while but it ended up leaving a ton of money on the table.

Pre-pandemic, 2015-2020, QQQ out performed VTI 117% to 60%. ARKK outperformed VTI 161% to 60%.

What am I missing here? For a 401k or IRA that's going to sit for 30 years, is the total market fund advice really relevant anymore?

By following traditional advice to get the cheapest total market fund, it has ended up costing people thousands of dollars more in opportunity cost.
Since your original posting, the total market is up about 1.4%, and ARKK is down about 35%.

http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D
OP left the forum back in Feb 2021...
Northern Flicker
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Northern Flicker »

You mean stopped posting?
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Candor »

Northern Flicker wrote: Thu May 13, 2021 4:46 pm You mean stopped posting?
They haven't been back to the forum, at least not signed in, since Feb 22.
Time is your friend, impulse is your enemy. - John C. Bogle
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by nisiprius »

I think it's about time for someone to say...

ARKK has had a negative correlation with stocks, ρ = -0.71.
For four months.

Source

Image
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by watchnerd »

nisiprius wrote: Thu May 13, 2021 5:17 pm I think it's about time for someone to say...

ARKK has had a negative correlation with stocks, ρ = -0.71.
That's even higher than Long Treasuries!

What a great diversifier!
60% Global Market Stocks (VT,FM) | 38% Global Market Bonds | 2% crypto & securitized gold || LMP TIPS/STRIPS || RSU + ESPP
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by langlands »

nisiprius wrote: Thu May 13, 2021 5:17 pm I think it's about time for someone to say...

ARKK has had a negative correlation with stocks, ρ = -0.71.
For four months.

Source

Image
Haha, I saw the fine print :twisted:.

The correlation has been low lately, but that -0.71 number is computed using literally 3 or 4 data points (monthly returns in 2021).

I think this is more representative:

https://www.portfoliovisualizer.com/ass ... &months=36

In general, I think it's better to choose daily returns instead of monthly returns to get more independent data points.

Correlation is about 0.5 currently. (It's 0.7 if you take the average over the current calendar year.)
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by smalliebigs »

I just love his use of the word "destroy". It's such a gen Z gamer thing to say.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Yarlonkol12 »

Candor wrote: Thu May 13, 2021 4:57 pm
Northern Flicker wrote: Thu May 13, 2021 4:46 pm You mean stopped posting?
They haven't been back to the forum, at least not signed in, since Feb 22.
Good to end on a high note, he might only check porfolio once a year, maybe it will come back a bit by then
Last edited by Yarlonkol12 on Thu May 13, 2021 6:39 pm, edited 1 time in total.
Astones
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Astones »

watchnerd wrote: Thu May 13, 2021 5:18 pm
nisiprius wrote: Thu May 13, 2021 5:17 pm I think it's about time for someone to say...

ARKK has had a negative correlation with stocks, ρ = -0.71.
That's even higher than Long Treasuries!

What a great diversifier!
What a bad news. I have been shorting ARKK in the hope of having an insurance over being long on VT...
With negative corr it won't work :( :(
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