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

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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 »

nigel_ht wrote: Mon Oct 04, 2021 2:36 pm
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…

“I know he's a good general, but is he lucky?”

— Napoleon Bonaparte
I remember reading somewhere a joke about a manager who threw away, without looking at them, every other resume that was forwarded to him. When asked why, he said "Well, I don't want to hire anyone who is unlucky".

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

Post by tdmp »

someone asked me about ARKK today. I said: "do it at your own risk."
Since OP posted this: 2-13-2021 per morningstar (returns from 2-12-2021 - a Friday):
1) ARKK: -25.39%
2) QQQ: +16.2% (I included QQQ because I think if you want tech stuff like ARKK: probably better off with QQQ)
3) SPY: +19.25%
4) VTI: +16.65%
-the question is: do ARKK buyers have enough conviction to hold it through the -25% AND knowing the others (qqq, spy, vti) went up by whatever percentage: a delta of 41% or more....psychologically, it is tough to do.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by gtrplayer »

On a sidenote, there’s now an anti-ARKK ETF called Short Innovation ETF, ticker SARK, that seeks to have the inverse daily return of ARKK.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by SuperTrooper87 »

gtrplayer wrote: Thu Nov 11, 2021 12:36 am On a sidenote, there’s now an anti-ARKK ETF called Short Innovation ETF, ticker SARK, that seeks to have the inverse daily return of ARKK.
I was looking at this ETF recently. Was hoping to see more feedback from bogleheads here on it.

Would investing (gambling?) in this be hedging against ones own investments in TSM? Or is it not a direct hedge because of how Cathy/ARKK has invested in very specific higher risk tech stocks?
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by happyisland »

SuperTrooper87 wrote: Fri Nov 12, 2021 8:32 am I was looking at this ETF recently. Was hoping to see more feedback from bogleheads here on it.
Haha. You need more than 21 pages of feedback about why it's a bad idea?
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by SuperTrooper87 »

happyisland wrote: Fri Nov 12, 2021 8:49 am
SuperTrooper87 wrote: Fri Nov 12, 2021 8:32 am I was looking at this ETF recently. Was hoping to see more feedback from bogleheads here on it.
Haha. You need more than 21 pages of feedback about why it's a bad idea?
Was referring to the new SARK etf
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by happyisland »

SuperTrooper87 wrote: Fri Nov 12, 2021 8:49 am Was referring to the new SARK etf
My bad! I guess since it's an inverse of ARKK you should just invert all the advice contained in this thread. :D
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by 3funder »

For me, it's because the odds are against them outperforming for the long haul. In fact, the odds are against them even surviving long-term. This doesn't mean they can't or won't, but I like my chances with total market index funds.
Global stocks, US bonds, and time.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by SuperTrooper87 »

happyisland wrote: Fri Nov 12, 2021 8:52 am
SuperTrooper87 wrote: Fri Nov 12, 2021 8:49 am Was referring to the new SARK etf
My bad! I guess since it's an inverse of ARKK you should just invert all the advice contained in this thread. :D
That’s kinda what I was thinking haha
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Dusn »

Bwlonge wrote: Sat Feb 13, 2021 7:14 pm Forget ARK for a second though. Even something as mundane as QQQ. If you invested everything in QQQ over the last 20 years over VTI, you would have come out way ahead. I'm assuming similar for VGT.

At this point, why wouldn't a broad tech fund get the same respect as VTI? I'm thinking that technology is a fundamental "sector" in how we've developed and will continue to develop. I feel like at this point if you're waiting for tech to come back down to VTI levels, you're doing the same thing as someone not investing because they expect the market to crash any second.

But then take a step forward on tech and move back to the ARK funds. Genomics, automation, fin tech, space exploration- all emerging technology. By throwing down on an ARK fund with .75 ER, its like hiring a team of analysts to pick winners as the fields develop. Companies that do or will do incredibly valuable things. Of course, it requires conviction on my part to believe in the manager's ability to pick and manage. But if I was to hire someone for a tech fund, it would be for emerging tech, not establish tech.

To grossly oversimplify with a poor analogy, 100% VTI strikes me as like not buying blu ray because the VCR plays movies just fine and thinking something else will just replace blu ray some day. Yeah, but, you get the value from blue ray then move on to the next emerging sector.

I don't own any ARKs yet, but am planning to go 30% allocation next week, only because I can't allocate more in my 403b.
I work in biotech and would never give my money to a venture capitalist or financial analyst to invest in tech. They know nothing about the actual technology that they’re putting millions of dollars into. Look at Theranos. How could anyone have not known that was complete BS? I’d guess that 90% of the submissions that the FDA has to review all day are just garbage being submitted so that device companies can say that they’re doing something and try to raise more money. You’ve got to keep the funding train going, even if you know you’re going nowhere. Using vague words like “disruption” “innovation” “personalized medicine” “ecosystem” etc seems to get attention as well.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by burritoLover »

SuperTrooper87 wrote: Fri Nov 12, 2021 8:32 am
gtrplayer wrote: Thu Nov 11, 2021 12:36 am On a sidenote, there’s now an anti-ARKK ETF called Short Innovation ETF, ticker SARK, that seeks to have the inverse daily return of ARKK.
I was looking at this ETF recently. Was hoping to see more feedback from bogleheads here on it.

Would investing (gambling?) in this be hedging against ones own investments in TSM? Or is it not a direct hedge because of how Cathy/ARKK has invested in very specific higher risk tech stocks?
Small cap value is what you want. The antithesis of the large cap growth stocks that are currently dominating TSM.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by jarjarM »

burritoLover wrote: Fri Nov 12, 2021 9:25 am
SuperTrooper87 wrote: Fri Nov 12, 2021 8:32 am
gtrplayer wrote: Thu Nov 11, 2021 12:36 am On a sidenote, there’s now an anti-ARKK ETF called Short Innovation ETF, ticker SARK, that seeks to have the inverse daily return of ARKK.
I was looking at this ETF recently. Was hoping to see more feedback from bogleheads here on it.

Would investing (gambling?) in this be hedging against ones own investments in TSM? Or is it not a direct hedge because of how Cathy/ARKK has invested in very specific higher risk tech stocks?
Small cap value is what you want. The antithesis of the large cap growth stocks that are currently dominating TSM.
That would be my vote too, use SCV to hedge against LCG. Of course, one can always get perfect hedge by shorting the market/trying SQQQ, of course, it's an expensive insurance. :wink:
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by FIre Fighter »

Nicolas wrote: Mon Sep 27, 2021 10:59 pm
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.
Looks like OP briefly returned from the dead on October 26th to make a couple posts in another thread. Below is what they posted, and the last sentence may be a bit telling on their motivations to chase returns.

“I tried picking stocks for a while, had solid information and those stocks are now doing well but with a lot of volatility. I still managed to lose money on them. I'm coming back to passive investing because the hype around investing just isn't for me. It's still very hard knowing people are getting rich quickly while I am not.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by chris319 »

I have a few shares of ARKF because I wanted to get into fintech. There aren't many fintech ETF's available.

ARKF is up YTD but I have yet to make my first dollar from it. I wouldn't go near ARKK, no way, no how.
Financial decisions based on emotion often turn out to be bad decisions.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by SafeBonds »

ARKK -5.74% YTD ARK flagship ETF
ARKF +7.10% YTD ARK Fintech ETF
VTI +26.00% YTD Total Stock Market
AVUV +45.45% YTD Avantis Small Cap Value

Tuttle Capital Management’s Short Innovation ETF (SARK) listed on Nasdaq on Tuesday Nov 9 with the aim of providing the inverse returns, on a single day’s basis, of ARKK. The first exchange traded fund to take an inverse exposure to another ETF.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by shess »

FIre Fighter wrote: Sun Nov 14, 2021 6:05 am
Nicolas wrote: Mon Sep 27, 2021 10:59 pm
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.
Looks like OP briefly returned from the dead on October 26th to make a couple posts in another thread. Below is what they posted, and the last sentence may be a bit telling on their motivations to chase returns.

“I tried picking stocks for a while, had solid information and those stocks are now doing well but with a lot of volatility. I still managed to lose money on them. I'm coming back to passive investing because the hype around investing just isn't for me. It's still very hard knowing people are getting rich quickly while I am not.
What will be really painful in the long term is finally realizing how many people got rich slowly by not blowing their money trying to get rich quickly.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by ImUrHuckleberry »

happyisland wrote: Fri Nov 12, 2021 8:52 am
SuperTrooper87 wrote: Fri Nov 12, 2021 8:49 am Was referring to the new SARK etf
My bad! I guess since it's an inverse of ARKK you should just invert all the advice contained in this thread. :D
Where is the guy with the Costanza avatar to chime in on this idea?
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by HomerJ »

shess wrote: Tue Nov 16, 2021 1:36 am What will be really painful in the long term is finally realizing how many people got rich slowly by not blowing their money trying to get rich quickly.
Homer Simpson: After years of disappointment with get rich quick schemes, I know I'm gonna get rich with this scheme. And quick.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by atdharris »

I rode ARKK through 2020 with about 5% of my portfolio in it, but this year has been disappointing. I also question some of the moves Cathie has made (buying a bunch of Zillow and then immediately selling). I think about booking the profits I have and rolling that into VTI and some into GBTC to keep my risk appetite satisfied.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Nathan Drake »

atdharris wrote: Tue Nov 16, 2021 10:19 am I rode ARKK through 2020 with about 5% of my portfolio in it, but this year has been disappointing. I also question some of the moves Cathie has made (buying a bunch of Zillow and then immediately selling). I think about booking the profits I have and rolling that into VTI and some into GBTC to keep my risk appetite satisfied.
There’s no methodology to her trading.

It amazes me that people think this is going to do well long term. So many active moves based on the whims of the market
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by atdharris »

Nathan Drake wrote: Tue Nov 16, 2021 10:23 am
atdharris wrote: Tue Nov 16, 2021 10:19 am I rode ARKK through 2020 with about 5% of my portfolio in it, but this year has been disappointing. I also question some of the moves Cathie has made (buying a bunch of Zillow and then immediately selling). I think about booking the profits I have and rolling that into VTI and some into GBTC to keep my risk appetite satisfied.
There’s no methodology to her trading.

It amazes me that people think this is going to do well long term. So many active moves based on the whims of the market
I am not sure. She had a good track record from inception before 2020, but I do understand very few fund managers can beat the market in the long run. Even Warren Buffett has underperformed since the GFC. And I don't think Cathie is WB.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by HomerJ »

Chasing active managers rarely works.

Even if they are really good (or lucky) at evaluating stocks, they are usually victims of their own success.

Once they have a good 1-year or 3-year or 5-year record, the money flows in, and their fund grows so large, picking unknown smaller stocks to increase returns is no longer an option.

When your fund has $100 million in it, investing $10 million in a small stock that triples in a year makes a huge difference.

When your fund has $20 billion in it, investing $10 million in a small stock that triples in a year isn't even noticeable. They end up having to invest in the same large cap stocks that everyone else is invested in.

But the fees from $20 billion are exceptional, so it's worth it to the fund manager to let their funds bloat.

Oh, and never look at a fund's results from inception. Almost no one gets those results. The vast majority of investors get into a fund AFTER it makes "The best funds of 2019!!" list.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by atdharris »

The only managed fund I own that has done well for a very long time is T. Rowe Price's Blue Chip Growth Fund, although it pretty much mirrored VTSAX until large cap growth took off in 2016
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by gubernaculum »

I would rather invest in TQQQ than Kathy Wood ARK funds. I dont think much of her or her understanding of tech and/or disruptive technologies.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by chris319 »

gubernaculum wrote: Tue Nov 16, 2021 11:07 am I would rather invest in TQQQ than Kathy Wood ARK funds.
That would be a smart move, speaking as someone who held TQQQ through the covid crash of 2020.
Financial decisions based on emotion often turn out to be bad decisions.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by MinnGuyInvesting »

I continue to hold my ARK holdings.

2021 has not been a great year (especially for ARK-G) but I'm happily holding these funds and continue to expect good things in the next few years as part of my portfolio.

I also hold other assets that are non-Bogleheadish as part of my investment strategy.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by HomerJ »

MinnGuyInvesting wrote: Wed Nov 17, 2021 1:27 pm I continue to hold my ARK holdings.

2021 has not been a great year (especially for ARK-G) but I'm happily holding these funds and continue to expect good things in the next few years as part of my portfolio.

I also hold other assets that are non-Bogleheadish as part of my investment strategy.
Well, it's good that you believe.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by afan »

I look at her as another Ken Heebner. Extreme volatility, some periods of great returns, some with terrible returns. Not worth considering as an investment since passive is better than active.

https://www.reuters.com/article/us-fund ... SKCN0VW2R7
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by surfstar »

gubernaculum wrote: Tue Nov 16, 2021 11:07 am I would rather invest in TQQQ than Kathy Wood ARK funds. I dont think much of her or her understanding of tech and/or disruptive technologies.
Oh ye of little faith.

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

Post by nisiprius »

MinnGuyInvesting wrote: Wed Nov 17, 2021 1:27 pm I continue to hold my ARK holdings.

2021 has not been a great year (especially for ARK-G) but I'm happily holding these funds and continue to expect good things in the next few years as part of my portfolio.

I also hold other assets that are non-Bogleheadish as part of my investment strategy.
Although I personally think ARK is a bunch of hooey and definitely not my thing, I think the plain facts should be acknowledged.

The total performance of ARKK even going back all the way to inception and including some lackluster years, has been excellent.

The pullback since the top, so far, has been small compared to what went before.

You could give half of the gain back and still be ahead of the S&P 500.

You won on this gamble, and you are so far ahead that you have the luxury of being able to lose quite a bit more and still quit while you're head.

source

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

Post by tsohg »

nisiprius wrote: Wed Nov 17, 2021 5:53 pm
MinnGuyInvesting wrote: Wed Nov 17, 2021 1:27 pm I continue to hold my ARK holdings.

2021 has not been a great year (especially for ARK-G) but I'm happily holding these funds and continue to expect good things in the next few years as part of my portfolio.

I also hold other assets that are non-Bogleheadish as part of my investment strategy.
Although I personally think ARK is a bunch of hooey and definitely not my thing, I think the plain facts should be acknowledged.

The total performance of ARKK even going back all the way to inception and including some lackluster years, has been excellent.

The pullback since the top, so far, has been small compared to what went before.

You could give half of the gain back and still be ahead of the S&P 500.

You won on this gamble, and you are so far ahead that you have the luxury of being able to lose quite a bit more and still quit while you're head.
Counterpoint: don't confuse brains with a bull market.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by nigel_ht »

tsohg wrote: Wed Nov 17, 2021 6:18 pm
nisiprius wrote: Wed Nov 17, 2021 5:53 pm
MinnGuyInvesting wrote: Wed Nov 17, 2021 1:27 pm I continue to hold my ARK holdings.

2021 has not been a great year (especially for ARK-G) but I'm happily holding these funds and continue to expect good things in the next few years as part of my portfolio.

I also hold other assets that are non-Bogleheadish as part of my investment strategy.
Although I personally think ARK is a bunch of hooey and definitely not my thing, I think the plain facts should be acknowledged.

The total performance of ARKK even going back all the way to inception and including some lackluster years, has been excellent.

The pullback since the top, so far, has been small compared to what went before.

You could give half of the gain back and still be ahead of the S&P 500.

You won on this gamble, and you are so far ahead that you have the luxury of being able to lose quite a bit more and still quit while you're head.
Counterpoint: don't confuse brains with a bull market.
She significantly beat the bull market average.

There are quite a few funds that didn’t.

Is she the next Warren Buffet? Probably not, but then again he had some nice advantages…
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by dogagility »

nisiprius wrote: Wed Nov 17, 2021 5:53 pm
MinnGuyInvesting wrote: Wed Nov 17, 2021 1:27 pm I continue to hold my ARK holdings.

2021 has not been a great year (especially for ARK-G) but I'm happily holding these funds and continue to expect good things in the next few years as part of my portfolio.

I also hold other assets that are non-Bogleheadish as part of my investment strategy.
Although I personally think ARK is a bunch of hooey and definitely not my thing, I think the plain facts should be acknowledged.

The total performance of ARKK even going back all the way to inception and including some lackluster years, has been excellent.

The pullback since the top, so far, has been small compared to what went before.

You could give half of the gain back and still be ahead of the S&P 500.

You won on this gamble, and you are so far ahead that you have the luxury of being able to lose quite a bit more and still quit while you're head.

source

Image
Good point, but an equally, if not more, important question is should a person put new money into ARKK? Does past out-performance of a sector play in an actively managed fund with high expenses equate to future out-performance?

I think most of us believe the answers to those questions is no.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by nigel_ht »

dogagility wrote: Thu Nov 18, 2021 6:55 am
nisiprius wrote: Wed Nov 17, 2021 5:53 pm
MinnGuyInvesting wrote: Wed Nov 17, 2021 1:27 pm I continue to hold my ARK holdings.

2021 has not been a great year (especially for ARK-G) but I'm happily holding these funds and continue to expect good things in the next few years as part of my portfolio.

I also hold other assets that are non-Bogleheadish as part of my investment strategy.
Although I personally think ARK is a bunch of hooey and definitely not my thing, I think the plain facts should be acknowledged.

The total performance of ARKK even going back all the way to inception and including some lackluster years, has been excellent.

The pullback since the top, so far, has been small compared to what went before.

You could give half of the gain back and still be ahead of the S&P 500.

You won on this gamble, and you are so far ahead that you have the luxury of being able to lose quite a bit more and still quit while you're head.

source

Image
Good point, but an equally, if not more, important question is should a person put new money into ARKK? Does past out-performance of a sector play in an actively managed fund with high expenses equate to future out-performance?

I think most of us believe the answers to those questions is no.
I guess if you like the strategy but didn’t join earlier it might not be terrible.

I wouldn’t put more than my funny money in there.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by nedsaid »

The Ark Funds are a very interesting concept. Have not invested in them because I did not want to chase very hot performance, in the past such hot funds cooled off after people dumped huge amounts of money into them. I have seen this movie before. Performance chasing is rarely a good idea.
A fool and his money are good for business.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Jack FFR1846 »

AARK funds might do poorly vs virtually everything out there and yet, they collect 0.75% expense ratio from you. While that happens, you could cleverly choose SARK and nearly do as well as NASDAQ while paying a 0.75% expense ratio.

Is it not clear that these kinds of funds somewhat rely on their spin doctors to get investors, then spend the ER money on their own yachts?
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by nisiprius »

A big problem is always "availability bias." Active ETFs and funds only come to our attention because they do well.

Presumably, you invest in an active ETF or fund because you don't think you can pick stocks yourself.

But, if not, can you pick a stock-picker?

ARKK was started in 2014. It was the same fund then. It had the same manager. It operated on the same strategy and premise.

Furthermore, ARKK actually did spectacularly well in 2017. 2017 was "only" +87% but take it out to 13 months and it more than doubled an investment. You have to be pretty impatient if that isn't fast enough for you.

There were five years during which people with stock-picker-picking skill could have picked Cathie Wood and ARK Invest.

Now, there is one post dated March 16, 2014
...
0.1% ARK FINTECH INNOVATION ETF (ARKF) (0.75% ER)
0.1% ARK 3D PRINTING ETF (PRNT) (0.66% ER)
0.1% ARK AUTONOMOUS TECHNOLOGY & ROBOTICS ETF (ARKQ) (0.75% ER)
0.1% ARK NEXT GENERATION INTERNET ETF (ARKW) (0.76% ER)
0.1% ARK ISRAEL INNOVATIVE TECHNOLOGY ETF (IZRL) (0.49% ER)
0.1% ARK INNOVATION ETF (ARKK) (0.75% ER)
0.1% ARK GENOMIC REVOLUTION ETF (ARKG) (0.75% ER)
...
(and no comment on them in the thread that follows.

After that, nothing, until 2019.

Feb. 27, 2019
...I am intrigued by the ETF ARKK and it's focus on disruptive innovation, and I am contemplating putting around 10% of my portfolio into it.
So the attention and the interest in ARKK had nothing to do with strategy, fundamentals, manager. They were all there waiting to be identified, and had turned in a year of +87% performance that apparently went largely unspotted, at least in this forum.

It was strictly about one burst of short-term performance in 2020.

If "tech is the future," it already that in 2018 or 2014. If "disruptive innovation" is the future, it was already that in 2018 or 2014. Broadly, tech is always the future. If Cathie Wood is a genius, she was already a genius in 2018 or 2014.

I wonder why ARKK didn't get much attention in 2017? Either +87% was not enough to propel it to the very top of any list, or it didn't coincide with the pandemic and sports betters switching to RobinHood?
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Nicolas
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Nicolas »

nisiprius wrote: Thu Nov 18, 2021 8:18 am Now, there is one post dated March 16, 2014
...
0.1% ARK FINTECH INNOVATION ETF (ARKF) (0.75% ER)
0.1% ARK 3D PRINTING ETF (PRNT) (0.66% ER)
0.1% ARK AUTONOMOUS TECHNOLOGY & ROBOTICS ETF (ARKQ) (0.75% ER)
0.1% ARK NEXT GENERATION INTERNET ETF (ARKW) (0.76% ER)
0.1% ARK ISRAEL INNOVATIVE TECHNOLOGY ETF (IZRL) (0.49% ER)
0.1% ARK INNOVATION ETF (ARKK) (0.75% ER)
0.1% ARK GENOMIC REVOLUTION ETF (ARKG) (0.75% ER)
...
(and no comment on them in the thread that follows.

After that, nothing, until 2019.
That post from 2014 was edited in 2020. The ARK ETFs could've been added on the later date. In fact they must’ve been, as some of these ETFs didn’t exist in 2014, they were added later. https://en.wikipedia.org/wiki/Ark_Invest

Also, his post in that thread from 8/31/2020: “I’ve updated my original post with current info.! Time has gone faster than I would have imagined.

Of course that further supports your argument.
garlandwhizzer
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by garlandwhizzer »

Massive amounts of market dollars these days focuses on highly speculative names that have outsized future disruptive narratives but lack the appeal of underlying fundamental numbers like PB, PE, DIV, etc., that old timers like me traditionally pay attention to. The stratospheric rise of BTC, TSLA, AMZN, etc., are examples of this speculation that puts full trust and billions of investment dollars in disruptive narratives. There have been so many big winners that realized their vast potential like AMZN, FB, APPL, GOOG have done. Demonstrable success in an investment strategy breeds more optimism and keeps it going.

ARKK management has a very successful record of insight in the tricky business of separating the wheat from the chaff in this speculative arena. It is not clear to me whether this represents skill or luck. It is also not clear to me whether the popularity of such highly speculative investing strategies will persist going forward. But I can't argue with its results.

Part of the appeal of this speculative investing (extremely high risk/extremely high reward) is that the current low expected future returns of traditional approaches. Based on current lofty valuations in both stocks and bonds, negative real interest rates, fears of inflation, unfavorable demographics in all DMs, high debt levels worldwide, stagnant growth of productivity, stagnant GDP growth in all DMs, it appears that traditional stock and bond portfolios are unlikely to produce the outsize returns going forward that we've enjoyed for multiple decades in the past. In fact, there is now a challenging combination of increasing longevity (longer retirement period to fund) plus the expectation of reduced investment returns in the future from traditional stock/bond investment strategies. There are many investors, especially younger ones who haven't ridden the investing gravy train for multiple past decades and may also have considerable debt. Using what seem to be realistic assumptions for future returns of traditional portfolios, funding retirement seems to be very difficult. That makes speculative investing extremely high risk/extremely high reward may look more appealing. Gambling looks more attractive when the odds of achieving success without gambling look more remote.

I don't know how long this speculative investing popularity will continue or whether ARKK will continue to be successful in exploiting it in the future. Personally I'm old and i don't want highly volatile assets to dominate my portfolio at any more than market weight. ARKK's volatility has been up to now predominantly in the right, upward direction, but in my experience volatility is not a one way street that always goes up. I take my hat off to investors who've rolled the dice early along and made bundles on ARKK. I wish them well going forward as I do all investors. However, I will not be one of them.

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

Post by chris319 »

2021 YTD 11/18/2021:

SPX: +25.25%

ARKK: -8.57%

What happened?

This may answer the question posed in the thread title.
Financial decisions based on emotion often turn out to be bad decisions.
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Orangutan
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Orangutan »

garlandwhizzer wrote: Thu Nov 18, 2021 12:00 pm Massive amounts of market dollars these days focuses on highly speculative names that have outsized future disruptive narratives but lack the appeal of underlying fundamental numbers like PB, PE, DIV, etc., that old timers like me traditionally pay attention to. The stratospheric rise of BTC, TSLA, AMZN, etc., are examples of this speculation that puts full trust and billions of investment dollars in disruptive narratives. There have been so many big winners that realized their vast potential like AMZN, FB, APPL, GOOG have done. Demonstrable success in an investment strategy breeds more optimism and keeps it going.

ARKK management has a very successful record of insight in the tricky business of separating the wheat from the chaff in this speculative arena. It is not clear to me whether this represents skill or luck. It is also not clear to me whether the popularity of such highly speculative investing strategies will persist going forward. But I can't argue with its results.

Part of the appeal of this speculative investing (extremely high risk/extremely high reward) is that the current low expected future returns of traditional approaches. Based on current lofty valuations in both stocks and bonds, negative real interest rates, fears of inflation, unfavorable demographics in all DMs, high debt levels worldwide, stagnant growth of productivity, stagnant GDP growth in all DMs, it appears that traditional stock and bond portfolios are unlikely to produce the outsize returns going forward that we've enjoyed for multiple decades in the past. In fact, there is now a challenging combination of increasing longevity (longer retirement period to fund) plus the expectation of reduced investment returns in the future from traditional stock/bond investment strategies. There are many investors, especially younger ones who haven't ridden the investing gravy train for multiple past decades and may also have considerable debt. Using what seem to be realistic assumptions for future returns of traditional portfolios, funding retirement seems to be very difficult. That makes speculative investing extremely high risk/extremely high reward may look more appealing. Gambling looks more attractive when the odds of achieving success without gambling look more remote.

I don't know how long this speculative investing popularity will continue or whether ARKK will continue to be successful in exploiting it in the future. Personally I'm old and i don't want highly volatile assets to dominate my portfolio at any more than market weight. ARKK's volatility has been up to now predominantly in the right, upward direction, but in my experience volatility is not a one way street that always goes up. I take my hat off to investors who've rolled the dice early along and made bundles on ARKK. I wish them well going forward as I do all investors. However, I will not be one of them.

Garland Whizzer
It’s not just funding retirement. It’s also the impossible cost of entry into the housing market, inflated cost of education, competition for careers, raising kids, nearly everything. It’s tough to maintain the standard of living the past few generations had. I avoid it, but I see why my peer group (Millenials) and younger want to roll the dice.
40 Years' Gatherin's
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by 40 Years' Gatherin's »

Why invest in ARKK? Nvidia has blown away ARKK over the last 5 years, so logically you should invest 100% of your money in Nvidia stock. Right? Right.

Please. VTSAX & Chill, son.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by nisiprius »

chris319 wrote: Thu Nov 18, 2021 7:48 pm 2021 YTD 11/18/2021:

SPX: +25.25%

ARKK: -8.57%

What happened?

This may answer the question posed in the thread title.
It's just more evidence that the interest in ARKK is superficial and based on recency, and very recent recency at that.

Seriously, if I had owned an investment that had doubled my money in 2017 and doubled it again in 2020 I would be inclined to forgive a -8.57% pullback!

To me, the fact that the noise has quieted is evidence that the people who were making the noise were not people who bought the fund early enough to double their money. Maybe they even bought in so late in 2020 that a -8.57% pullback did wipe out their gains, and disgust them.

Sure, we're in the grip of a considerable amount of speculative mania, but unfortunately IMHO that's not actionable information. I don't know how to estimate what dollar percentage of the stock market is in the hands of speculative maniacs. Or, let's say, how much more than usual. So I don't know how anxious to be about it.
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atdharris
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by atdharris »

It's hard to complain too much in 2021 given the 152% return in 2020. ARKK did manage to beat the market even before 2020, but as others have pointed out, will that continue? Even the great Warren Buffett could not beat the market forever. It's hard to believe Cathie Wood will. I put 5% of my taxable portfolio into ARKK and have seen nice gains, but I do worry about how long her success will last.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Nowizard »

It is an adage that people state past performance does not reflect future performance, but absolute agreement with that is false. We all make predictions on future performance, minimally to the degree that we invest in the market at all since there are also adages about "What makes you think it is different this time," or "Stay invested" when the market goes down. The past is one predictor of the future, though evaluation of the factors involved going forward relative to the past factors leading to a desired outcome are important. There is, for example, another adage related to "momentum investing." Though the Boglehead philosophy is highly successful, there are other successful approaches as well. Gather your information and make your choices. Ultimately, we are all predicting our approach will meet our needs eventually. The process we choose is crucial, but no process with complex issues guarantees outcome.

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

Post by nisiprius »

The standard disclaimer accompanies mutual fund literature, that normally presents returns for a maximum period of ten years.

It applies pretty well
a) to comparisons between similar mutual funds or ETFs, and
b) it applies to past performance over ten years.

A better statement is hard to craft, but it would be more like this:

"When comparing similar mutual funds, past performance over periods of ten years or less is no sure indicator of future results. In fact, it is not even a rough indicator."

Another good one would be:

"When comparing similar mutual funds, past performance over even long periods of time is much less predictive than intuition suggests."

Or, more precisely:

"When comparing similar mutual funds, past performance over even long periods of time is much less predictive than intuition, based on variables following the normal distribution, would suggest."

Another good one would be:

"When comparing similar mutual funds, expense ratio is not a good predictor of future results, but it is better than past performance, and better than any other single measurement Morningstar knows about."
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Escapevelocity »

MinnGuyInvesting wrote: Wed Nov 17, 2021 1:27 pm I continue to hold my ARK holdings.

2021 has not been a great year (especially for ARK-G) but I'm happily holding these funds and continue to expect good things in the next few years as part of my portfolio.

I also hold other assets that are non-Bogleheadish as part of my investment strategy.
Still holding ARK funds at 30% portfolio? You've been rebalancing into them on the drop?
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by lazydavid »

gtrplayer wrote: Thu Nov 11, 2021 12:36 am On a sidenote, there’s now an anti-ARKK ETF called Short Innovation ETF, ticker SARK, that seeks to have the inverse daily return of ARKK.
If SARK gets a groundswell of support, and especially if it leads to a hyperbolic thread title like this one, I will definitely invest in ARKK. :)
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by nisiprius »

I'm just waiting for someone to suggest that a great strategy would be invest in ARKK and "hedge" by also investing in SARK.

(That's a joke, by the way. But I have seen a serious article in Kiplinger's suggesting adding a small amount of an inverse S&P ETF to "hedge" your stock holdings).
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by garlandwhizzer »

I saw an interview today on Bloomberg with Cathie Wood, the chief investment officer and portfolio manager of ARK funds. After incredibly outstanding performance for several years the last 12 months has been tough. They are however still way ahead of both cap weight indexes and factor funds since inception. She was of course very positive about the future outlook for ARK and said their models currently project a 40%/yr. compound rate of return for the next 5 years. That's better than their models have ever projected before. You would quadruple your investment in 5 years. I have been listening to sales pitches for 35 years and I've never heard a more optimistic forecast, not only the numbers but the tone of her voice and her enthusiasm. She exuded a strong sense of certainty about achieving those returns.

There can be no disagreement about Ms. Wood's past excellent performance. This is a partly due to picking the right growth names and also being perfectly tuned in to the ever shifting pulse of younger MEME/Reddit mind set which prefers very high risk/very high return stocks, long shots with compelling growth and innovation narratives. Earlier along she got the outrageously high rewards, now she's starting to experience the high risk. I have no idea about how ARK's strategy will play out in the future. She may continue to be an oracle that sees the future clearly well before it happens. Or, the setback over the last year may just be a tiny taste of what is to come.

I don't invest in things I don't understand. To put it mildly I'm not an expert on how the future of tech innovation is going to play out. I don't believe anyone else has reliable certainty about that either. I also don't believe that anyone can reliably achieve a 40% annual compound rate of return for the next 5 years doing anything. If she achieves that, I take my hat off to her. For younger MEME investors this sales pitch might assuage their uncertainty about recent ARK setbacks. When I hear it, however, my skepticism skyrockets. I am old and clearly not the target audience. I've seen too many sweet dreams blow up.

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