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

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JonnyDVM
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Re: Anyone investing in ARKK since it was first mentioned here is now behind VTI

Post by JonnyDVM »

hnd wrote: Wed May 12, 2021 10:22 am
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%.
July 20. Still up, but have lost a lot of money since OP jinxed it.
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Re: Anyone investing in ARKK since it was first mentioned here is now behind VTI

Post by Astones »

JonnyDVM wrote: Thu May 13, 2021 6:42 pm
July 20. Still up, but have lost a lot of money since OP jinxed it.
Are you the poster who was waiting for summer in order to have the tax advantage ? You have been very unlucky with the timing so far.
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Re: Anyone investing in ARKK since it was first mentioned here is now behind VTI

Post by SlowMovingInvestor »

Astones wrote: Thu May 13, 2021 6:54 pm
JonnyDVM wrote: Thu May 13, 2021 6:42 pm
July 20. Still up, but have lost a lot of money since OP jinxed it.
Are you the poster who was waiting for summer in order to have the tax advantage ? You have been very unlucky with the timing so far.
A few years ago, I received some stock as a result of a spin-off. It had a decent gain, but I decided to wait till next year before selling because I expected a lower bracket. But the stock fell after a bad report, and by the time I sold, I had no gains to worry about :(

I learned never to let the tax tail wag the investment DOGE.
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Re: Anyone investing in ARKK since it was first mentioned here is now behind VTI

Post by JonnyDVM »

SlowMovingInvestor wrote: Thu May 13, 2021 7:01 pm
Astones wrote: Thu May 13, 2021 6:54 pm
JonnyDVM wrote: Thu May 13, 2021 6:42 pm
July 20. Still up, but have lost a lot of money since OP jinxed it.
Are you the poster who was waiting for summer in order to have the tax advantage ? You have been very unlucky with the timing so far.
A few years ago, I received some stock as a result of a spin-off. It had a decent gain, but I decided to wait till next year before selling because I expected a lower bracket. But the stock fell after a bad report, and by the time I sold, I had no gains to worry about :(

I learned never to let the tax tail wag the investment DOGE.
Hahah. Yes that was me. Hey, It could still go back up 30%. I have two more months. I’m going go to learn to take profits on these fun money plays one of these decades. Buy and hold gets drilled into your subconscious around here. It can be quite hard to pull the sell trigger.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by HomerJ »

Never worry about taxes.

Gain is a gain.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by drk »

Via Ben Felix, a WSJ article reports that the money-weighted return of ARK funds has been 5.24% annually. I know the point has been made, but that's not destroying VTSAX or VTIAX.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by atdharris »

drk wrote: Thu May 13, 2021 11:15 pm Via Ben Felix, a WSJ article reports that the money-weighted return of ARK funds has been 5.24% annually. I know the point has been made, but that's not destroying VTSAX or VTIAX.
Where are they getting 5.24% from? Even before 2020, ARKK had an annualized return of 21% according to Portfolio Visualizer. If you include 2020 and 2021, it's 34% annualized
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Monster99 »

atdharris wrote: Fri May 14, 2021 9:17 am
drk wrote: Thu May 13, 2021 11:15 pm Via Ben Felix, a WSJ article reports that the money-weighted return of ARK funds has been 5.24% annually. I know the point has been made, but that's not destroying VTSAX or VTIAX.
Where are they getting 5.24% from? Even before 2020, ARKK had an annualized return of 21% according to Portfolio Visualizer. If you include 2020 and 2021, it's 34% annualized
Money weighted return uses cash flows and present value to calculate performance. I believe it is equivalent to IRR.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by firebirdparts »

It's not really that meaningful in this case, though. It is what it is. Lots of active managers made 100% in 2020. Naturally they've done some selling of their "brilliant vision". You have to make hay while the sun shines.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Astones »

atdharris wrote: Fri May 14, 2021 9:17 am Where are they getting 5.24% from? Even before 2020, ARKK had an annualized return of 21% according to Portfolio Visualizer. If you include 2020 and 2021, it's 34% annualized
What this data is telling you is that most investors started buying ARKK at a later stage, and relatively few were in the game since the beginning, thus enjoying the performance in its full extent.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Williams57 »

ARKK invests in "disruptive innovation". Whatever this means, this is what they do. It may or may not beat the market. I own some and I am down net so far. I am not planning to sell. It's a small % of my portfolio. I am not crazy nor bitter about it. Just curious.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by vineviz »

Monster99 wrote: Fri May 14, 2021 9:53 am
atdharris wrote: Fri May 14, 2021 9:17 am
drk wrote: Thu May 13, 2021 11:15 pm Via Ben Felix, a WSJ article reports that the money-weighted return of ARK funds has been 5.24% annually. I know the point has been made, but that's not destroying VTSAX or VTIAX.
Where are they getting 5.24% from? Even before 2020, ARKK had an annualized return of 21% according to Portfolio Visualizer. If you include 2020 and 2021, it's 34% annualized
Money weighted return uses cash flows and present value to calculate performance. I believe it is equivalent to IRR.
Bloomberg computes the average cost basis of the stocks held by ARK (the firm, not ARKK the ETF) to be around $208/share. The average value of the ETFs issued by ARK is about $140.


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

Post by atdharris »

Williams57 wrote: Fri May 14, 2021 1:18 pm ARKK invests in "disruptive innovation". Whatever this means, this is what they do. It may or may not beat the market. I own some and I am down net so far. I am not planning to sell. It's a small % of my portfolio. I am not crazy nor bitter about it. Just curious.
Me as well. I bought 100 shares for fun last fall and am about even now. It ran up at the start of the year and I thought I had struck gold, but I don't plan to sell. Nothing wrong with having a small part of your portfolio exposed to the fund.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Williams57 »

atdharris wrote: Fri May 14, 2021 1:38 pm
Williams57 wrote: Fri May 14, 2021 1:18 pm ARKK invests in "disruptive innovation". Whatever this means, this is what they do. It may or may not beat the market. I own some and I am down net so far. I am not planning to sell. It's a small % of my portfolio. I am not crazy nor bitter about it. Just curious.
Me as well. I bought 100 shares for fun last fall and am about even now. It ran up at the start of the year and I thought I had struck gold, but I don't plan to sell. Nothing wrong with having a small part of your portfolio exposed to the fund.
To be honest I'm surprised it hasn't been dropping more given that there are a lot "meme" and overvalued (to put it mildly) stocks in the portfolio that have been dropping like crazy. I guess it's diversified enough lol. And there is still room for it to keep dropping. I wonder how low.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by rich126 »

Last year I bought Zoom and then it doubled soon after I purchased it. Seemed too much too soon and I didn't expect the hype to last so I sold 50% of it at 100% profit and kept the remainder. It wasn't a large purchase. I looked the other day and that 50% I kept and was once at a 100% profit is now down to about 10% profit.

I plan to keep it and see what happens to it. Years ago I traded in a stock (ISRG - Intuitive Surgical) that was a high flyer (up and down) and eventually sold out of it. I looked and if I had kept it, I would have made tons of money on it. So with Zoom I don't expect that to happen, I think it just happened to be in the right place at the right time but since the money isn't much, it would be interesting to see what happens down the road. If it drops much I might sell it but it is much less than 1% of my total investments.

Right now a lot of people in these investments are still viewing drops as buying opportunities which seems risky to me. Drops in stocks with real earnings I view as buying opps but with stocks whose price depends on hype-growth, I tend to be more skeptical.

A lot of these tech stocks will either end up going out of business, or getting acquired by a larger tech stock, and the rare few will be a nice profitable investment.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Lee_WSP »

Williams57 wrote: Wed May 19, 2021 10:25 am
atdharris wrote: Fri May 14, 2021 1:38 pm
Williams57 wrote: Fri May 14, 2021 1:18 pm ARKK invests in "disruptive innovation". Whatever this means, this is what they do. It may or may not beat the market. I own some and I am down net so far. I am not planning to sell. It's a small % of my portfolio. I am not crazy nor bitter about it. Just curious.
Me as well. I bought 100 shares for fun last fall and am about even now. It ran up at the start of the year and I thought I had struck gold, but I don't plan to sell. Nothing wrong with having a small part of your portfolio exposed to the fund.
To be honest I'm surprised it hasn't been dropping more given that there are a lot "meme" and overvalued (to put it mildly) stocks in the portfolio that have been dropping like crazy. I guess it's diversified enough lol. And there is still room for it to keep dropping. I wonder how low.
Which stocks are those? Just curious. Their main holding is telsa at around ten percent.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Williams57 »

Lee_WSP wrote: Wed May 19, 2021 1:30 pm
Williams57 wrote: Wed May 19, 2021 10:25 am
atdharris wrote: Fri May 14, 2021 1:38 pm
Williams57 wrote: Fri May 14, 2021 1:18 pm ARKK invests in "disruptive innovation". Whatever this means, this is what they do. It may or may not beat the market. I own some and I am down net so far. I am not planning to sell. It's a small % of my portfolio. I am not crazy nor bitter about it. Just curious.
Me as well. I bought 100 shares for fun last fall and am about even now. It ran up at the start of the year and I thought I had struck gold, but I don't plan to sell. Nothing wrong with having a small part of your portfolio exposed to the fund.
To be honest I'm surprised it hasn't been dropping more given that there are a lot "meme" and overvalued (to put it mildly) stocks in the portfolio that have been dropping like crazy. I guess it's diversified enough lol. And there is still room for it to keep dropping. I wonder how low.
Which stocks are those? Just curious. Their main holding is telsa at around ten percent.
https://ark-funds.com/wp-content/fundsi ... LDINGS.pdf
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Lee_WSP »

Williams57 wrote: Wed May 19, 2021 2:45 pm
Lee_WSP wrote: Wed May 19, 2021 1:30 pm
Williams57 wrote: Wed May 19, 2021 10:25 am
atdharris wrote: Fri May 14, 2021 1:38 pm
Williams57 wrote: Fri May 14, 2021 1:18 pm ARKK invests in "disruptive innovation". Whatever this means, this is what they do. It may or may not beat the market. I own some and I am down net so far. I am not planning to sell. It's a small % of my portfolio. I am not crazy nor bitter about it. Just curious.
Me as well. I bought 100 shares for fun last fall and am about even now. It ran up at the start of the year and I thought I had struck gold, but I don't plan to sell. Nothing wrong with having a small part of your portfolio exposed to the fund.
To be honest I'm surprised it hasn't been dropping more given that there are a lot "meme" and overvalued (to put it mildly) stocks in the portfolio that have been dropping like crazy. I guess it's diversified enough lol. And there is still room for it to keep dropping. I wonder how low.
Which stocks are those? Just curious. Their main holding is telsa at around ten percent.
https://ark-funds.com/wp-content/fundsi ... LDINGS.pdf
Yes, that is the list I was looking at. I don't recall any of the top ten being referred to as "meme" stocks. However, I'm not well versed in the craziness.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by nisiprius »

Williams57 wrote: Wed May 19, 2021 2:45 pm
Yes, that is the list I was looking at. I don't recall any of the top ten being referred to as "meme" stocks. However, I'm not well versed in the craziness.
Nor am I.

Trying a quick Google search, I found a website, Meme Stock Tracker, that claims to follow them, and the top twenty as of this hour are (the number is "times memed"):
AMC 142
GME 103
AMD 61
TSLA 35
PLTR 24
TA 20
GE 19
AAPL 15
SU 12
FORD 9
RIOT 9
GDP 8
RKT 8
CAT 6
FB 6
FIT 6
SPOT 6
BB 5
CLF 5
FI 5
III 5
NUE 5
PRPL 5
API 4
ARKK includes three of the top twenty meme stocks: TSLA, PLTR, and SPOT.

A complicating factor is that Cathie Wood is followed closely so something might become a meme stock as a result of Wood choosing it, so it's hard to disentangle cause and effect.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by gubernaculum »

TQQQ is the answer when time is right. Not yet.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by HRG »

For what its worth, I started a tracking portfolio with 100 shares in each ARK fund against iShares ITOT on Dec 18,2020. As of today, I'd be down 15.79% with ARK and up 10.40% with ITOT. Nuff said!
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by rockstar »

HRG wrote: Wed May 19, 2021 9:47 pm For what its worth, I started a tracking portfolio with 100 shares in each ARK fund against iShares ITOT on Dec 18,2020. As of today, I'd be down 15.79% with ARK and up 10.40% with ITOT. Nuff said!
That's not the Boglehead way. You have to lose over at least a decade. I personally usually give up after two or three years.

If I used that argument in the international threads, folks would say I'm nuts. Folks here have made far less over the last ten years in International funds against US. But they still buy International. If you buy a bond fund, you're pretty much guaranteed to lose against inflation. Folks here still buy bond funds.

I guess the same argument can be applied to ARK. You have to be in it long enough for it to outperform. I think, Buffet gave hedge funds a decade. They all lost against the S&P 500, so he suggested folks buy it instead.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Thesaints »

rockstar wrote: Wed May 19, 2021 9:55 pm I think, Buffet gave hedge funds a decade. They all lost against the S&P 500, so he suggested folks buy it instead.
It was actually a portfolio of hedge funds that lost. It is different and the more hedge funds the portfolio contains, the more Buffett's bet was a sure winner.
A different story would have been Buffett betting against a number of hedge funds individually. Then the story would have been the opposite: the more hedge funds accept the bet, ther more it is guaranteed that at least one will outperform the S&P and it could be a major overperformance !

btw Ms. Wood goes around forecasting "massive deflation" coming. Totally expected: everybody is forecasting higher inflation, so no brownie points to be gained there. Let's try an outlandish forecast: should she be right it would bring her back on the front pages. If it goes wrong, she will swipe it under the carpet.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Williams57 »

Lee_WSP wrote: Wed May 19, 2021 7:05 pm
Williams57 wrote: Wed May 19, 2021 2:45 pm
Lee_WSP wrote: Wed May 19, 2021 1:30 pm
Williams57 wrote: Wed May 19, 2021 10:25 am
atdharris wrote: Fri May 14, 2021 1:38 pm

Me as well. I bought 100 shares for fun last fall and am about even now. It ran up at the start of the year and I thought I had struck gold, but I don't plan to sell. Nothing wrong with having a small part of your portfolio exposed to the fund.
To be honest I'm surprised it hasn't been dropping more given that there are a lot "meme" and overvalued (to put it mildly) stocks in the portfolio that have been dropping like crazy. I guess it's diversified enough lol. And there is still room for it to keep dropping. I wonder how low.
Which stocks are those? Just curious. Their main holding is telsa at around ten percent.
https://ark-funds.com/wp-content/fundsi ... LDINGS.pdf
Yes, that is the list I was looking at. I don't recall any of the top ten being referred to as "meme" stocks. However, I'm not well versed in the craziness.
A lot of these stocks are what r/wallstreetbets folks trade in, so to me they are meme stocks. Not to say they are worthless. Likely a lot of them are good companies, just not yet profitable.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by atdharris »

I wouldn't say ARKK is full of meme stocks. I see no AMC, GME or anything. TSLA and Shopify were meme stocks years ago but obviously are now very large companies. She does have some strange holdings though that make up a small amount of the portfolio. As I said, I have no problems investing 5% of my taxable account with Cathie, but I would not be shocked to see underperformance.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by happyisland »

It is almost uncanny how well the OP called the top in ARKK.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Maverick3320 »

"By following traditional advice to get the cheapest total market fund, it has ended up costing people thousands of dollars more in opportunity cost.."

-OP's last sentence in the original comment
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by GP813 »

You can be right about the future and still be too early or get wrecked by market conditions. When you're managing other folks money the greater environment matters even if your bull case/techno revolution ends up coming to fruition.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by assyadh »

happyisland wrote: Mon Sep 27, 2021 2:29 pm It is almost uncanny how well the OP called the top in ARKK.
This is fascinating. OP called it perfectly. can't make this up
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by anon_investor »

assyadh wrote: Mon Sep 27, 2021 7:24 pm
happyisland wrote: Mon Sep 27, 2021 2:29 pm It is almost uncanny how well the OP called the top in ARKK.
This is fascinating. OP called it perfectly. can't make this up
Reminds me of the poster who called the Covid crash perfectly and went all to cash at the peak, but didn't go back in fast enough...
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by nisiprius »

To be fair, from inception to 9/2021, the Ark Innovation ETF has far outperformed
  • The Vanguard Total Stock Market Index ETF, and the S&P 500
  • The Vanguard Information Technology Index ETF
  • The Invesco QQQ (Nasdaq-100 tracking) ETF
Image

Indeed: the only away an ARKK investor could have managed to underperform the S&P 500 would have been by waiting until 8/19/2020 to get in. Anyone who got in earlier has outperformed the S&P 500.

Similarly, the only way an investor could have have managed to lose money in ARKK would have been to wait until after 12/7/2020 to get in. Anyone who got in before then has made money.

That doesn't mean I think ARKK is a good idea. But the total silence in this thread from May until now suggests that talk about investing in ARKK for the long term was just talk. The interest in ARKK was just because it had doubled investors' money in a year. Once it quit looking as if it would be doing that every year, interest evaporated.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by thenextguy »

nisiprius wrote: Mon Sep 27, 2021 7:47 pm To be fair, from inception to 9/2021, the Ark Innovation ETF has far outperformed
  • The Vanguard Total Stock Market Index ETF, and the S&P 500
  • The Vanguard Information Technology Index ETF
  • The Invesco QQQ (Nasdaq-100 tracking) ETF
Look at that volatility though.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by anon_investor »

nisiprius wrote: Mon Sep 27, 2021 7:47 pm To be fair, from inception to 9/2021, the Ark Innovation ETF has far outperformed
  • The Vanguard Total Stock Market Index ETF, and the S&P 500
  • The Vanguard Information Technology Index ETF
  • The Invesco QQQ (Nasdaq-100 tracking) ETF
Image

Indeed: the only away an ARKK investor could have managed to underperform the S&P 500 would have been by waiting until 8/19/2020 to get in. Anyone who got in earlier has outperformed the S&P 500.

Similarly, the only way an investor could have have managed to lose money in ARKK would have been to wait until after 12/7/2020 to get in. Anyone who got in before then has made money.

That doesn't mean I think ARKK is a good idea. But the total silence in this thread from May until now suggests that talk about investing in ARKK for the long term was just talk. The interest in ARKK was just because it had doubled investors' money in a year. Once it quit looking as if it would be doing that every year, interest evaporated.
Too bad the OP was talking about buying ARKK in Feb 2021...
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by nisiprius »

thenextguy wrote: Mon Sep 27, 2021 7:59 pm
nisiprius wrote: Mon Sep 27, 2021 7:47 pm To be fair, from inception to 9/2021, the Ark Innovation ETF has far outperformed
  • The Vanguard Total Stock Market Index ETF, and the S&P 500
  • The Vanguard Information Technology Index ETF
  • The Invesco QQQ (Nasdaq-100 tracking) ETF
Look at that volatility though.
Sure. Look at the Sharpe and Sortino ratios. The return, adjusted for risk, is only slightly higher than for VTI, and lower than for VGT and QQQ.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by protagonist »

I know nothing about Cathie Wood or ARKK....I don't bother following this sort of thing ever since I converted to index funds in the early 2000s and that has saved me an amazing amount of priceless (!!!) time and agita. I do know when I was chasing the high performers in the 1990s I did great in spurts but overall, I ultimately did not beat the market.

I did notice a post by Nisiprius early in this thread that ARKK had a standard deviation of returns about double that of VTI.

Is it any surprise that a growth fund that takes that much more risk than the broad market might hugely outperform the broad market during a bull market over 4 years? I might even expect it. With the exception of a short steep market drop early in the pandemic the market has been screaming along to dizzying heights during the past 4 years when ARKK has allegedly been doing so well.

For those of us with decades of experience with the stock market, who have been through lots of steep ups and downs, that sort of thing means nothing. I wonder how ARKK would have fared in 2008. My guess is not well at all. But then again, I suppose my guess is no more valid than those guessing that it will continue to outperform ad infinitum. We are all bozos on this bus.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Nicolas »

assyadh wrote: Mon Sep 27, 2021 7:24 pm
happyisland wrote: Mon Sep 27, 2021 2:29 pm It is almost uncanny how well the OP called the top in ARKK.
This is fascinating. OP called it perfectly. can't make this up
The OP abandoned Bogleheads nine days after starting this thread. Or at least they haven’t logged in since then.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Hyperchicken »

OP returned back to the future.

Who knows, maybe we will catch up with him in time, and he will post here again.
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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 5:52 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.
Maybe what you are missing is you invest in the future, not in the past. Your original post was Feb 2021.

https://www.portfoliovisualizer.com/bac ... ion2_2=100
Northern Flicker
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Northern Flicker »

rockstar wrote: Wed May 19, 2021 9:55 pm
HRG wrote: Wed May 19, 2021 9:47 pm For what its worth, I started a tracking portfolio with 100 shares in each ARK fund against iShares ITOT on Dec 18,2020. As of today, I'd be down 15.79% with ARK and up 10.40% with ITOT. Nuff said!
That's not the Boglehead way. You have to lose over at least a decade. I personally usually give up after two or three years.

If I used that argument in the international threads, folks would say I'm nuts. Folks here have made far less over the last ten years in International funds against US. But they still buy International. If you buy a bond fund, you're pretty much guaranteed to lose against inflation. Folks here still buy bond funds.

I guess the same argument can be applied to ARK. You have to be in it long enough for it to outperform...
The time horizon argument applies to asset classes, which are collections of investments that are exposed to the same systematic risk factors within the class. While an asset class may underperform indefinitely, we expect a systematic risk factor to be rewarded with a premium that we expect to be realized given enough time.

An actively managed portfolio is not synonymous with an asset class. An actively managed portfolio could underperform indefinitely with no reason to expect otherwise if the managers are changing the asset classes to which the portfolio is exposed.
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HomerJ
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by HomerJ »

nisiprius wrote: Mon Sep 27, 2021 7:47 pm Indeed: the only away an ARKK investor could have managed to underperform the S&P 500 would have been by waiting until 8/19/2020 to get in. Anyone who got in earlier has outperformed the S&P 500.
That's PRECISELY the problem. The vast majority of investors don't pile into a fund until AFTER it's hot.

I bet more than 50% of people who invested in ARKK underperformed, because most people didn't invest in it at inception or the early years. Not until the big returns showed up, THEN people heard about it and invested.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
Northern Flicker
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Northern Flicker »

Nah, the real problem is that it is/was little more than a concentrated sector bet that happened to pay off.
Triple digit golfer
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Triple digit golfer »

HomerJ wrote: Wed Sep 29, 2021 6:17 pm
nisiprius wrote: Mon Sep 27, 2021 7:47 pm Indeed: the only away an ARKK investor could have managed to underperform the S&P 500 would have been by waiting until 8/19/2020 to get in. Anyone who got in earlier has outperformed the S&P 500.
That's PRECISELY the problem. The vast majority of investors don't pile into a fund until AFTER it's hot.

I bet more than 50% of people who invested in ARKK underperformed, because most people didn't invest in it at inception or the early years. Not until the big returns showed up, THEN people heard about it and invested.
A very interesting data point would be the average or weighted average INVESTOR return rather than the fund's return. I guarantee you that for all of the popular and hot actively managed funds, the pattern would be the fund's return is much higher than the investors return.

Funds get big because investors chase performance. The performance comes before the investors because investors don't even know it exists until the high flying performance has already taken place.
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anon_investor
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by anon_investor »

Triple digit golfer wrote: Wed Sep 29, 2021 6:36 pm
HomerJ wrote: Wed Sep 29, 2021 6:17 pm
nisiprius wrote: Mon Sep 27, 2021 7:47 pm Indeed: the only away an ARKK investor could have managed to underperform the S&P 500 would have been by waiting until 8/19/2020 to get in. Anyone who got in earlier has outperformed the S&P 500.
That's PRECISELY the problem. The vast majority of investors don't pile into a fund until AFTER it's hot.

I bet more than 50% of people who invested in ARKK underperformed, because most people didn't invest in it at inception or the early years. Not until the big returns showed up, THEN people heard about it and invested.
A very interesting data point would be the average or weighted average INVESTOR return rather than the fund's return. I guarantee you that for all of the popular and hot actively managed funds, the pattern would be the fund's return is much higher than the investors return.

Funds get big because investors chase performance. The performance comes before the investors because investors don't even know it exists until the high flying performance has already taken place.
Yep. A former coworker changed jobs in the beginning of the year, rolled his 401k into a tIRA and bought ARKK in January/February 2021... :oops:
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Triple digit golfer »

anon_investor wrote: Wed Sep 29, 2021 6:38 pm
Triple digit golfer wrote: Wed Sep 29, 2021 6:36 pm
HomerJ wrote: Wed Sep 29, 2021 6:17 pm
nisiprius wrote: Mon Sep 27, 2021 7:47 pm Indeed: the only away an ARKK investor could have managed to underperform the S&P 500 would have been by waiting until 8/19/2020 to get in. Anyone who got in earlier has outperformed the S&P 500.
That's PRECISELY the problem. The vast majority of investors don't pile into a fund until AFTER it's hot.

I bet more than 50% of people who invested in ARKK underperformed, because most people didn't invest in it at inception or the early years. Not until the big returns showed up, THEN people heard about it and invested.
A very interesting data point would be the average or weighted average INVESTOR return rather than the fund's return. I guarantee you that for all of the popular and hot actively managed funds, the pattern would be the fund's return is much higher than the investors return.

Funds get big because investors chase performance. The performance comes before the investors because investors don't even know it exists until the high flying performance has already taken place.
Yep. A former coworker changed jobs in the beginning of the year, rolled his 401k into a tIRA and bought ARKK in January/February 2021... :oops:
Yep, one of probably tens of thousands.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Valuethinker »

Northern Flicker wrote: Tue Sep 28, 2021 1:21 am
Bwlonge wrote: Sat Feb 13, 2021 5:52 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.
Maybe what you are missing is you invest in the future, not in the past. Your original post was Feb 2021.

https://www.portfoliovisualizer.com/bac ... ion2_2=100
OP gave up on this Forum, it appears.
tdmp
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by tdmp »

Did OP stuck with ARKK...i mean since the first post on 2-13-2021: ARKK returned -28.2% and VTI returned +9.5%...are people disciplined enough to "stick" with ARKK???
roth evangelist
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by roth evangelist »

Post should be retitled to "Why the disdain for managed funds like ARKK that destro[ed] total market funds [last year]?" ARKK has been around for a blip on the timeline compared to the S&P 500 and the TSM.
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anon_investor
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by anon_investor »

tdmp wrote: Fri Oct 01, 2021 9:59 pm Did OP stuck with ARKK...i mean since the first post on 2-13-2021: ARKK returned -28.2% and VTI returned +9.5%...are people disciplined enough to "stick" with ARKK???
I don't think the OP has been active since starting this thread...
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by xraygoggles »

"Cathie Wood’s flagship, the ARK Innovation ETF (ticker ARKK), has almost certainly just recorded its biggest ever quarter of outflows, with about $1.97 billion leaving the popular exchange-traded fund through to late September."
(https://www.bloomberg.com/news/articles ... d-ku87wo80)

Hmmm. perhaps OP was a part of that large outflow from ARKK last quarter? Since he/she has been eerily quiet since the first post. :twisted:
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nigel_ht
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by nigel_ht »

xraygoggles wrote: Mon Oct 04, 2021 2:22 pm "Cathie Wood’s flagship, the ARK Innovation ETF (ticker ARKK), has almost certainly just recorded its biggest ever quarter of outflows, with about $1.97 billion leaving the popular exchange-traded fund through to late September."
(https://www.bloomberg.com/news/articles ... d-ku87wo80)

Hmmm. perhaps OP was a part of that large outflow from ARKK last quarter? Since he/she has been eerily quiet since the first post. :twisted:
Well, if you think she has good insight into the market and lucky then now is likely a good time to invest in her…

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