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

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nedsaid
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Re: ARKK: Top 1% to Bottom 1%

Post by nedsaid »

Taylor Larimore wrote: Sun Mar 07, 2021 11:11 am Bogleheads:

ARKK is a gamble. Last year it was in the top 1% of its class. This year it is in the bottom 1% of its class.

https://www.morningstar.com/etfs/arcx/arkk/quote

Bogleheads are foolish to gambling with their retirement and other goals.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "The beauty of owning the market is that you eliminate individual stock risk, you eliminate market sector risk, and you eliminate manager risk."
There is nothing wrong with owning aggressive investments but they should be a smaller part of your portfolio. I have owned aggressive growth funds like certain American Century funds like Heritage for many years. Sort of like putting an additive into the gas tank to boost octane, a Tiger in the Tank. But like anything else, you don't want to overdo it. Don't want to blow up the gas tank.

I have no recommendation on the ARK Funds but I suppose they can add a bit of excitement to a portfolio. We all can use a little excitement but not too much. They seem to be a better answer to a mid-life crisis than a bad toupee, a sportscar, or an unhealthy relationship.
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 watchnerd »

1789 wrote: Sun Mar 07, 2021 10:58 am So i dont see any problem if you are successful :wink:
Success has a way of making luck look like brilliance.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Keenobserver »

Da5id wrote: Sun Mar 07, 2021 10:30 am
hoofaman wrote: Sun Mar 07, 2021 10:25 am
Keenobserver wrote: Sun Mar 07, 2021 9:47 am
birdog wrote: Sun Mar 07, 2021 7:14 am
Keenobserver wrote: Sun Mar 07, 2021 7:11 am Looking for a re-entry point back into Arkk? Maybe.
You are?
Maybe, but will have drop a bit more and put some play money. Something tells me Tesla is close to the bottom.
How can you tell? Honest question, Tesla was $200 in June ($1,000 pre split), which seemed crazy at the time. What has changed with Tesla since June to make it worth 3x or more that price?
Consulting "The Amazing Carnac" clearly can provide this critical information in a timely manner (dated reference, but hey lots of us on bogleheads are on the older side).
With Tesla its more about behavior than financials. There are heaps of people wanting to jump in, looking for the bottom. So when they decide/ " feel" the bottom is near, they are going to jump in troves. Tesla is not going anywhere, and the fanboys are loyal.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by fwellimort »

renewed wrote: Sun Mar 07, 2021 5:09 am How are you not a billionaire already if all of this is so dead obvious, as you say?
I made good money on the two. But as I never had much to start with, there's no way to make so much.
Especially cause I avoid margins/options.

Also, just because an event is likely to happen does not mean one can time the bottom and the top.
Better to get out when the event is happening than it is to try to time the top.

To be a billionaire off stocks, you have to be right multiple times in a row using heavily leveraged vehicles (especially due to liquidity issues). Finding like 20+ GME events in a row when GME was supposed to be a once in a lifetime chance event and timing all those is pretty much impossible.

Stocks CAN be inefficient (and noticed) very rarely. Especially when something unprecedented like a global pandemic occurs. But those stocks tend to be for stocks that have a small market cap (there's not much money in first place).
Timing when the event occurs and when it ends is another. GME squeeze could have ended at $40 instead of $500+ premarket. But the info for GME shares being mispriced was available in plain site for the public to notice. If the market is "efficient", it seems terribly inefficient in noticing with public info. After all, it took months for the market to correct.

Also, I don't expect these kind of events from occuring again for decades to come. Covid was an abnormally.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by SlowMovingInvestor »

I realize this forum doesn't that much about individual stocks, but I'm curious if someone has some opinions on one of ARK's major holdings, PLTR. [ No political comments, please].

Lots of software companies have very high valuations these days, so I'm not sure PLTR's are out of whack. I'm more interested in whether it's technology is really revolutionary or just a variant of existing AI/ML/Data Analytics.

I've heard high level descriptions of it's products, but I really don't know what sort of market they have (outside of government) and whether their main revenue source is consulting and software implementation rather than software sales.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by jackbeagle »

watchnerd wrote: Sat Mar 06, 2021 9:55 pm
JonnyDVM wrote: Sat Mar 06, 2021 9:42 pm
anon_investor wrote: Sat Mar 06, 2021 3:10 pm
JonnyDVM wrote: Sat Mar 06, 2021 2:46 pm Ohhhhh so you guys like to see us fail huh? Well let’s see how you like it-

Why isn’t everyone in VTSAX?? It can’t possibly go down. Surely VTSAX returns will far superior to ARK going forward. Everyone should be be 100% in VTSAX!!! If you’re not you’re absolutely leaving money on the table.
Some one will say, heck yeah! There are a number of BHs that are 100% VTSAX and chill (no fixed income or EF).
I’m going to jinx every single one of the Boglehead darling funds. Tomorrow I’m coming after total bond and Berkshire. Then I’ll spend a week commenting on how fantastic SPY has done the last couple years. I will singlehandedly knock us into a bear market out of spite.
What no international or world equity on the list?

Oh, right, half of BH hates international...
Gotta be attractive enough stuff when compared to tech sector and they'll bite. Enter: Emerging Markets
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Re: ARKK: Top 1% to Bottom 1%

Post by JonnyDVM »

nedsaid wrote: Sun Mar 07, 2021 11:55 am
Taylor Larimore wrote: Sun Mar 07, 2021 11:11 am Bogleheads:

ARKK is a gamble. Last year it was in the top 1% of its class. This year it is in the bottom 1% of its class.

https://www.morningstar.com/etfs/arcx/arkk/quote

Bogleheads are foolish to gambling with their retirement and other goals.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "The beauty of owning the market is that you eliminate individual stock risk, you eliminate market sector risk, and you eliminate manager risk."
There is nothing wrong with owning aggressive investments but they should be a smaller part of your portfolio. I have owned aggressive growth funds like certain American Century funds like Heritage for many years. Sort of like putting an additive into the gas tank to boost octane, a Tiger in the Tank. But like anything else, you don't want to overdo it. Don't want to blow up the gas tank.

I have no recommendation on the ARK Funds but I suppose they can add a bit of excitement to a portfolio. We all can use a little excitement but not too much. They seem to be a better answer to a mid-life crisis than a bad toupee, a sportscar, or an unhealthy relationship.
That’s funny. I was thinking at breakfast today how lame I am that my adventurous spending these days is on “not index” investments. I’m not even buying anything!
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by as9 »

SlowMovingInvestor wrote: Sun Mar 07, 2021 6:17 pm I realize this forum doesn't that much about individual stocks, but I'm curious if someone has some opinions on one of ARK's major holdings, PLTR. [ No political comments, please].

Lots of software companies have very high valuations these days, so I'm not sure PLTR's are out of whack. I'm more interested in whether it's technology is really revolutionary or just a variant of existing AI/ML/Data Analytics.

I've heard high level descriptions of it's products, but I really don't know what sort of market they have (outside of government) and whether their main revenue source is consulting and software implementation rather than software sales.
I have about 3% of our portfolio in Palantir. It’s pretty much our only individual stock. It’s in the red from when I made the initial purchase and I’ve added to the position on the way down.

There’s definitely a lot of conflicting info about their tech and how they farm out engineers, but they also have a FAANG like hiring bar. I don’t know how big they are going to get, but I’m confident they are going to be around for a long time.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by vineviz »

birdog wrote: Sun Mar 07, 2021 6:44 am
donaldfair71 wrote: Sun Mar 07, 2021 5:51 am
anon_investor wrote: Sun Mar 07, 2021 12:21 am
watchnerd wrote: Sun Mar 07, 2021 12:17 am
langlands wrote: Sun Mar 07, 2021 12:14 am

What? That would be a ludicrous view. By that logic, you would buy at any price.
There are some Bogleheads who believe exactly this.

That valuations don't matter.
E.g. "VTSAX and chill"
Nah, that crowd just believes that nobody knows anything, to a point that it can be consistently acted upon, better than the market knows. A very different thing.
Agree. That and "time in the market is more important than timing the market".
If my calculations are right, the median investor in ARKK has lost money.

Not merely underperformed the broad market: actually lost money.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by vv19 »

ARK is a gamble but you will never hear a peep about funds like Wellington and Wellesley. It is incredible.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by watchnerd »

jay22 wrote: Mon Mar 08, 2021 9:29 am ARK is a gamble but you will never hear a peep about funds like Wellington and Wellesley. It is incredible.
What's the connection, other than they're all active?
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by SlowMovingInvestor »

jay22 wrote: Mon Mar 08, 2021 9:29 am ARK is a gamble but you will never hear a peep about funds like Wellington and Wellesley. It is incredible.
Maybe after ARKK has a 90+ year record, we won't comment on it too :twisted:

I hold neither of the Ws because I'd rather do my own custom balanced fund allocation, but they're both fine balanced funds.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by vv19 »

SlowMovingInvestor wrote: Mon Mar 08, 2021 11:07 am
jay22 wrote: Mon Mar 08, 2021 9:29 am ARK is a gamble but you will never hear a peep about funds like Wellington and Wellesley. It is incredible.
Maybe after ARKK has a 90+ year record, we won't comment on it too :twisted:

I hold neither of the Ws because I'd rather do my own custom balanced fund allocation, but they're both fine balanced funds.
So "past if not a precursor for the future" doesn't really apply to the W funds, right? :D

My point is, there's a lot of bias here for Vanguard active funds which doesn't really align with the bashing points for ARK made on this thread.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by drk »

jay22 wrote: Mon Mar 08, 2021 11:30 am So "past if not a precursor for the future" doesn't really apply to the W funds, right? :D

My point is, there's a lot of bias here for Vanguard active funds which doesn't really align with the bashing points for ARK made on this thread.
In your opinion, Bogleheads should treat the ARK funds exactly the same as two balanced funds managed by Bogle's former company?
A useful razor: anyone asking about speculative strategies on Bogleheads.org has no business using them.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Da5id »

jay22 wrote: Mon Mar 08, 2021 11:30 am
SlowMovingInvestor wrote: Mon Mar 08, 2021 11:07 am
jay22 wrote: Mon Mar 08, 2021 9:29 am ARK is a gamble but you will never hear a peep about funds like Wellington and Wellesley. It is incredible.
Maybe after ARKK has a 90+ year record, we won't comment on it too :twisted:

I hold neither of the Ws because I'd rather do my own custom balanced fund allocation, but they're both fine balanced funds.
So "past if not a precursor for the future" doesn't really apply to the W funds, right? :D

My point is, there's a lot of bias here for Vanguard active funds which doesn't really align with the bashing points for ARK made on this thread.
There is general (but not universal) dislike of managed funds on bogleheads. I think most of us who don't use managed funds would say that they can be fine, and may be the best choice in some cases (401k, etc) where there is a limited number of available selections. But I'd also guess that most bogleheads if they choose/had to get a managed found would want one that:

* Is low cost
* Has had consistent management for some time, and a defined strategy
* Is intended to be a long term holding

As to your point that "past is not a precursor for the future", well, I basically agree. Which is why I buy index funds. Studies showing that outperforming mutual funds don't continue "winning" are there if you care to read them.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by SlowMovingInvestor »

jay22 wrote: Mon Mar 08, 2021 11:30 am
SlowMovingInvestor wrote: Mon Mar 08, 2021 11:07 am
jay22 wrote: Mon Mar 08, 2021 9:29 am ARK is a gamble but you will never hear a peep about funds like Wellington and Wellesley. It is incredible.
Maybe after ARKK has a 90+ year record, we won't comment on it too :twisted:

I hold neither of the Ws because I'd rather do my own custom balanced fund allocation, but they're both fine balanced funds.
So "past if not a precursor for the future" doesn't really apply to the W funds, right? :D

My point is, there's a lot of bias here for Vanguard active funds which doesn't really align with the bashing points for ARK made on this thread.
1) There are plenty of Bogleheads who really don't use VG's active funds that much.

2) VG's active funds are generally low cost, many (but not all) equity funds are reasonably tax efficient. And those that are not tax efficient such as Capital Opp get criticized a lot (I do it myself).

3) VG's long history (including closing hot funds like PrimeCap) provides some assurance that they will take actions in the interest of their shareholders (not that that stops criticism of VG on this forum)

4) My math may be a little weak, but I think that a 90+ year record of steady management is more significant than a 1 year record which could well be flash in the pan

Even among active funds, there are wide variations. And comparing balanced funds (one of which is 60% bonds) with an ultra aggressive high growth ETF doesn't make sense.
Last edited by SlowMovingInvestor on Mon Mar 08, 2021 12:17 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 cinghiale »

jay22 wrote:
My point is, there's a lot of bias here for Vanguard active funds which doesn't really align with the bashing points for ARK made on this thread.
“Bashing?” Just a little hyperbole to spice up the discussion, perhaps? C’mon. The thread title is bad enough with turbo words like “disdain” and “destroy” tossed over the trenches like so many hand grenades.

Give the thread a careful and dispassionate look-over. Most every reply has ranged between “disinclined” (this isn’t something I would do,” to “disagreement” (“this doesn’t square with the principles that rescued me from confusing gambling with investing”). If you promote a new, untested, high-risk fund on a forum founded on the ideas and insights of John Bogle, you have to expect a degree of push-back. If any of the replies have been inaccurate or unfair, point out the problem.

A valid point is being made that there’s almost nothing in common between AARK and the likes of the Wellesley Income save for the fact that Wellesley is an actively managed. Look at the long-term track record. Look at the risk level. Look at the portfolio turnover. Look at the expense ratio. Look at the volatility. And then factor in that a significant percentage of those who identify as Bogleheads would have nothing to do with Wellesley or Wellington.

But with almost ten years and close to a thousand posts on this board, you know that already, don’t you...
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Re: ARKK: Top 1% to Bottom 1%

Post by Carol88888 »

nedsaid wrote: Sun Mar 07, 2021 11:55 am
Taylor Larimore wrote: Sun Mar 07, 2021 11:11 am Bogleheads:

ARKK is a gamble. Last year it was in the top 1% of its class. This year it is in the bottom 1% of its class.

https://www.morningstar.com/etfs/arcx/arkk/quote

Bogleheads are foolish to gambling with their retirement and other goals.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "The beauty of owning the market is that you eliminate individual stock risk, you eliminate market sector risk, and you eliminate manager risk."
There is nothing wrong with owning aggressive investments but they should be a smaller part of your portfolio. I have owned aggressive growth funds like certain American Century funds like Heritage for many years. Sort of like putting an additive into the gas tank to boost octane, a Tiger in the Tank. But like anything else, you don't want to overdo it. Don't want to blow up the gas tank.

I have no recommendation on the ARK Funds but I suppose they can add a bit of excitement to a portfolio. We all can use a little excitement but not too much. They seem to be a better answer to a mid-life crisis than a bad toupee, a sportscar, or an unhealthy relationship.
Do you have any parameters for what you might consider a reasonable amount of an aggressive investment to an otherwise widely diversified portfolio?
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Carol88888 »

Taylor Larimore wrote: Sun Feb 28, 2021 2:57 pm Bogleheads:

Morningstar did an analysis of ARKK. Conclusion: "Very risky."

https://www.morningstar.com/articles/10 ... -portfolio

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "The beauty of owning the market is that you eliminate individual stock risk, you eliminate market sector risk, and you eliminate manager risk."
Very helpful article to see the areas of risk. Thing that struck me right away was the fact that the number of holdings is only 48 and yet the top ten holdings make up more than 50% of fund.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by whereskyle »

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.
What a timely post! Of course we don't know the full story quite yet, but in the less than a month since OP posted this, ARKK is down 30% from its high. It seems OP posted this right at the all-time high as well.

This behavior--"how could you ignore a clear winner!?"--and its risks--buying at peaks just before the dives--is exactly the reason why Bogleheads avoid the hottest funds and stick with the funds guaranteed to deliver the market averages every year.
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Re: ARKK: Top 1% to Bottom 1%

Post by Anon9001 »

nedsaid wrote: Sun Mar 07, 2021 11:55 am There is nothing wrong with owning aggressive investments but they should be a smaller part of your portfolio. I have owned aggressive growth funds like certain American Century funds like Heritage for many years. Sort of like putting an additive into the gas tank to boost octane, a Tiger in the Tank. But like anything else, you don't want to overdo it. Don't want to blow up the gas tank.

I have no recommendation on the ARK Funds but I suppose they can add a bit of excitement to a portfolio. We all can use a little excitement but not too much. They seem to be a better answer to a mid-life crisis than a bad toupee, a sportscar, or an unhealthy relationship.
The problem is ARK Funds have no advantage over using UPRO,SSO leveraged ETF/Index Options and Futures. The higher return for higher risk argument is not guaranteed for the former so you might just end up taking higher risk and get a lower return than Market but with UPRO,SSO leveraged ETF/Index Options and Futures you pretty much are guaranteed higher return in exchange for higher risk.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by 1789 »

Just think of this for a second. The fund manager is in financial industry like 40 years and how come she is able to get +100% returns on all her funds in 2020? I think she had the best year of her lifetime. That is pure luck. A real talent don't wait 40 years to beat the market, imo.
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Re: ARKK: Top 1% to Bottom 1%

Post by S4C5 »

Anon9001 wrote: Mon Mar 08, 2021 1:22 pm
The problem is ARK Funds have no advantage over using UPRO,SSO leveraged ETF/Index Options and Futures. The higher return for higher risk argument is not guaranteed for the former so you might just end up taking higher risk and get a lower return than Market but with UPRO,SSO leveraged ETF/Index Options and Futures you pretty much are guaranteed higher return in exchange for higher risk.
Leveraged ETFs are losers over the long-term because of how they rebalance their holdings. I'm pretty sure most advise against buying and holding a 2X or 3X S&P fund because over the long run you don't actually get 3X the S&P (wouldn't everybody do it if that were true?)

The ARK funds do seem to just be the NASDAQ on steroids though.

I'm pretty sure I've been catching a falling knife and have stopped lump buying into them and just hope this recovers in the long run.
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Re: ARKK: Top 1% to Bottom 1%

Post by Semantics »

S4C5 wrote: Mon Mar 08, 2021 2:24 pm
Anon9001 wrote: Mon Mar 08, 2021 1:22 pm
The problem is ARK Funds have no advantage over using UPRO,SSO leveraged ETF/Index Options and Futures. The higher return for higher risk argument is not guaranteed for the former so you might just end up taking higher risk and get a lower return than Market but with UPRO,SSO leveraged ETF/Index Options and Futures you pretty much are guaranteed higher return in exchange for higher risk.
Leveraged ETFs are losers over the long-term because of how they rebalance their holdings. I'm pretty sure most advise against buying and holding a 2X or 3X S&P fund because over the long run you don't actually get 3X the S&P (wouldn't everybody do it if that were true?)

The ARK funds do seem to just be the NASDAQ on steroids though.

I'm pretty sure I've been catching a falling knife and have stopped lump buying into them and just hope this recovers in the long run.
ARK funds rebalance daily to some extent as well, so it's not obvious to me that they don't suffer a similar fate. For instance, when TSLA was spiking, they had to sell to keep the holding at 10% of the portfolio and thereby missed out on some of the gains.

QLD (2x QQQ) had a better Sharpe ratio than ARKK prior to 2020.
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Re: ARKK: Top 1% to Bottom 1%

Post by vineviz »

S4C5 wrote: Mon Mar 08, 2021 2:24 pm
Anon9001 wrote: Mon Mar 08, 2021 1:22 pm
The problem is ARK Funds have no advantage over using UPRO,SSO leveraged ETF/Index Options and Futures. The higher return for higher risk argument is not guaranteed for the former so you might just end up taking higher risk and get a lower return than Market but with UPRO,SSO leveraged ETF/Index Options and Futures you pretty much are guaranteed higher return in exchange for higher risk.
Leveraged ETFs are losers over the long-term because of how they rebalance their holdings. I'm pretty sure most advise against buying and holding a 2X or 3X S&P fund because over the long run you don't actually get 3X the S&P (wouldn't everybody do it if that were true?)
It’s not true that ARKK has a return stream anything like a leveraged S&P 500 fund, but it’s also not true that leveraged ETFs are losers over the long run.

Judicious use of them, with special attention paid to diversification and rebalancing, can make them reasonable performers over the long term.
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Re: ARKK: Top 1% to Bottom 1%

Post by nedsaid »

Carol88888 wrote: Mon Mar 08, 2021 12:39 pm
nedsaid wrote: Sun Mar 07, 2021 11:55 am
Taylor Larimore wrote: Sun Mar 07, 2021 11:11 am Bogleheads:

ARKK is a gamble. Last year it was in the top 1% of its class. This year it is in the bottom 1% of its class.

https://www.morningstar.com/etfs/arcx/arkk/quote

Bogleheads are foolish to gambling with their retirement and other goals.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "The beauty of owning the market is that you eliminate individual stock risk, you eliminate market sector risk, and you eliminate manager risk."
There is nothing wrong with owning aggressive investments but they should be a smaller part of your portfolio. I have owned aggressive growth funds like certain American Century funds like Heritage for many years. Sort of like putting an additive into the gas tank to boost octane, a Tiger in the Tank. But like anything else, you don't want to overdo it. Don't want to blow up the gas tank.

I have no recommendation on the ARK Funds but I suppose they can add a bit of excitement to a portfolio. We all can use a little excitement but not too much. They seem to be a better answer to a mid-life crisis than a bad toupee, a sportscar, or an unhealthy relationship.
Do you have any parameters for what you might consider a reasonable amount of an aggressive investment to an otherwise widely diversified portfolio?
In my case, I have a lot of Value investments in my portfolio and always have so I felt comfortable having a higher proportion of my portfolio in more aggressive investments like the Growth funds at American Century. In the days when my portfolio was over 90% stocks, I had probably 40% or so in moderately or very aggressive stock funds. Today, I am at about 65% stocks probably less than 10% of the portfolio is in very aggressive investments. With the ARK funds, I would probably limit it to 5% of a portfolio, they are pretty high octane investments.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by SlowMovingInvestor »

I'm not sure why'd you take a leveraged QQQ or PYQ to replace ARKK. Yes, you may get equivalent return at lower risk, but if you believe in ARKK (I'm a skeptic for the most part), you want a dollop of the small and medium caps it holds that presumably have 'exponential' technologies.

You don't want a larger dose of mostly megacaps which is what leverage will get you.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by invester123 »

If you had 10k to drop right now what would you do in the current market? Dump it into total market fund? Drop it into a long term hold at a "discount" or something else?
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Da5id »

invester123 wrote: Mon Mar 08, 2021 3:38 pm If you had 10k to drop right now what would you do in the current market? Dump it into total market fund? Drop it into a long term hold at a "discount" or something else?
Apply it to adjust to my target asset allocation.
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Post by Taylor Larimore »

invester123 wrote: Mon Mar 08, 2021 3:38 pm If you had 10k to drop right now what would you do in the current market? Dump it into total market fund? Drop it into a long term hold at a "discount" or something else?
Investor123:

I would do exactly what Da5id suggests using The Three-Fund Portfolio.

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

Post by FIBoston »

I'm curious if any of the folks on here who are so willing to write Ark off have actually taken the time to research the funds themselves. Do folks making the comparisons between Ark and other past high performing funds know that Ark is a 100% transparent fund that (by law) shares all of their research freely and publicly - something that other funds never did? Do they realize Ark is pretty clear about investing on a 5 year time horizon, and not on quarterly or annual returns? Do they realize that Ark's analyst structure is set up to take a holistic view of the economy, as opposed to a siloed segmentation of various market sectors? Have they listened to Cathie Wood's quarterly ITK sessions, the Ark Teams Monthly Market Update Webinars, or do they receive the daily email outlining all their trades?

I'm not an Ark fan-boy. I have a very small amount as part of my overall portfolio, but that's more because I'm passionate about innovation (especially in the Genomics space) and feel that there is enough of a chance of the next few years being strong that I'm willing to try to super-charge a very small about of my savings. But I feel that a lot of the criticism on here boils down to people basing Ark's future prospects on the past performance of other active funds. Yes - 99% (or whatever ridiculously high percentage it is) of active funds fail to outperform the market. But what if Ark is that 1%? Again, I'm not saying they are, but there is so much available material with them that it seems a bit disingenuous and uncritical to build an opinion without at least taking the time to go through that material. This feels especially relevant to these boards because Ark has recently become more and more vocally critical of both passive index funds and bond funds in general being the sole positions in a portfolio - and they have provided research and numbers to back these claims up.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by HomerJ »

FIBoston wrote: Mon Mar 08, 2021 4:05 pmBut I feel that a lot of the criticism on here boils down to people basing Ark's future prospects on the past performance of other active funds. Yes - 99% (or whatever ridiculously high percentage it is) of active funds fail to outperform the market. But what if Ark is that 1%?
No one is saying Ark absolutely will fail. No one is saying Ark absolutely cannot be that be 1%.

We're saying the chance is 1%.

And you agree with us.

Which is why we have "disdain" for "managed funds like ARKK" that "destroy" total market funds.

Because 99% of the time, they don't, over the long run.

The OP plopping 30% of his net worth into an active fund like this is a bet, and not a good bet.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by firebirdparts »

jay22 wrote: Mon Mar 08, 2021 11:30 am So "past if not a precursor for the future" doesn't really apply to the W funds, right? :D
That doesn't actually apply to anything. It's nonsense. I mean, who knows, maybe we will be living at the bottom of the ocean next summer and eating rocks. But I doubt it.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by SlowMovingInvestor »

FIBoston wrote: Mon Mar 08, 2021 4:05 pm I'm curious if any of the folks on here who are so willing to write Ark off have actually taken the time to research the funds themselves. Do folks making the comparisons between Ark and other past high performing funds know that Ark is a 100% transparent fund that (by law) shares all of their research freely and publicly - something that other funds never did? Do they realize Ark is pretty clear about investing on a 5 year time horizon, and not on quarterly or annual returns? Do they realize that Ark's analyst structure is set up to take a holistic view of the economy, as opposed to a siloed segmentation of various market sectors? Have they listened to Cathie Wood's quarterly ITK sessions, the Ark Teams Monthly Market Update Webinars, or do they receive the daily email outlining all their trades?
1) I haven't listened to their sessions because I don't own it and I'm not interested enough to attend sessions.

2) The ETFs have to reveal all their holdings daily so I'm not sure why it's such a big deal that they reveal trades. Again, not interested enough to follow it.

3) Almost every Active Fund management that I can remember touts their 'unique' research analyst bench. Nothing unusual about that. And without using terms such as 'exponential technologies' too. And most tout their long term goals too, since they want people to stick with them long term ! And many tout how they'll overperform index funds.

4) Sharing research - I've heard that they share research. If that includes all the details and financial projections they anticipate for stocks they buy, I'd be interested actually, but I don't see it as a game changer any more than sell side analyst research (which is a lot better than it used to be).


I (and others) have seen lots of high flying fund managers, many with records far longer than ARKs. Now, I think that ARK might take longer to burn out than some of the late 90s funds just because social media tends to magnify cult followings (for stocks and fund managers). And maybe it is part of that 1%. So we should throw out our investment philosophy because of a 1% chance.

I can well see investing in ARK just to spice up a small portion of my holdings -- but I wouldn't take that to mean I subscribe to the notion of the fund manager's genius.
Last edited by SlowMovingInvestor on Mon Mar 08, 2021 4:28 pm, edited 2 times in total.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by vineviz »

FIBoston wrote: Mon Mar 08, 2021 4:05 pm I'm curious if any of the folks on here who are so willing to write Ark off have actually taken the time to research the funds themselves.
I don't see many people "writing off" ARK Invest, but you can be sure that many people warning against the siren song of funds like this have done plenty of research.

But it's also true that once you've seen the curtain pulled back on one "wizard" you don't need to a whole lot of additional research the next time someone tries to fool you with the same smoke and mirrors.

The crucial lesson for individual investors to learn, IMHO, is that EVEN IF a subset of active managers has enough investment skill to persistently beat the market AND low enough self-confidence to fail to charge enough in fees to negate that outperformance (and, for the record, I don't think this subset of active managers exists) it is STILL true that no amount of due-diligence will enable the investor to distinguish the 99% from the 1% before the fact. Reading reports, watching interviews, reviewing holdings: none of that will increase your chances of picking the unicorn instead of a donkey.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by jarjarM »

FIBoston wrote: Mon Mar 08, 2021 4:05 pm I'm curious if any of the folks on here who are so willing to write Ark off have actually taken the time to research the funds themselves. Do folks making the comparisons between Ark and other past high performing funds know that Ark is a 100% transparent fund that (by law) shares all of their research freely and publicly - something that other funds never did? Do they realize Ark is pretty clear about investing on a 5 year time horizon, and not on quarterly or annual returns? Do they realize that Ark's analyst structure is set up to take a holistic view of the economy, as opposed to a siloed segmentation of various market sectors? Have they listened to Cathie Wood's quarterly ITK sessions, the Ark Teams Monthly Market Update Webinars, or do they receive the daily email outlining all their trades?

I'm not an Ark fan-boy. I have a very small amount as part of my overall portfolio, but that's more because I'm passionate about innovation (especially in the Genomics space) and feel that there is enough of a chance of the next few years being strong that I'm willing to try to super-charge a very small about of my savings. But I feel that a lot of the criticism on here boils down to people basing Ark's future prospects on the past performance of other active funds. Yes - 99% (or whatever ridiculously high percentage it is) of active funds fail to outperform the market. But what if Ark is that 1%? Again, I'm not saying they are, but there is so much available material with them that it seems a bit disingenuous and uncritical to build an opinion without at least taking the time to go through that material. This feels especially relevant to these boards because Ark has recently become more and more vocally critical of both passive index funds and bond funds in general being the sole positions in a portfolio - and they have provided research and numbers to back these claims up.
I'm curious, since you said you're passionate about the Genomic space. What's your view on inclusion of PACB instead of ILMN? While I won't say I'm an expert in the field but I worked for one of the company (a few years ago) and have several friends working in the other. Is it just the long reads?
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by chicagoan23 »

FIBoston wrote: Mon Mar 08, 2021 4:05 pm I'm curious if any of the folks on here who are so willing to write Ark off have actually taken the time to research the funds themselves. Do folks making the comparisons between Ark and other past high performing funds know that Ark is a 100% transparent fund that (by law) shares all of their research freely and publicly - something that other funds never did? Do they realize Ark is pretty clear about investing on a 5 year time horizon, and not on quarterly or annual returns? Do they realize that Ark's analyst structure is set up to take a holistic view of the economy, as opposed to a siloed segmentation of various market sectors? Have they listened to Cathie Wood's quarterly ITK sessions, the Ark Teams Monthly Market Update Webinars, or do they receive the daily email outlining all their trades?

I'm not an Ark fan-boy. I have a very small amount as part of my overall portfolio, but that's more because I'm passionate about innovation (especially in the Genomics space) and feel that there is enough of a chance of the next few years being strong that I'm willing to try to super-charge a very small about of my savings. But I feel that a lot of the criticism on here boils down to people basing Ark's future prospects on the past performance of other active funds. Yes - 99% (or whatever ridiculously high percentage it is) of active funds fail to outperform the market. But what if Ark is that 1%? Again, I'm not saying they are, but there is so much available material with them that it seems a bit disingenuous and uncritical to build an opinion without at least taking the time to go through that material. This feels especially relevant to these boards because Ark has recently become more and more vocally critical of both passive index funds and bond funds in general being the sole positions in a portfolio - and they have provided research and numbers to back these claims up.
I could spend days researching Ark and their reports, absorbing their analysis of how passive index funds will underperform, double-checking the transparency of their trades, considering their holistic view of the economy, learning about the truly amazing innovations at the companies they invest in, watching their YouTube videos, back-testing their performance and all the rest. My research and thought process could be absolutely, completely 100% correct.

And then after all that, the market can take my $100,000 to $65,000 in three weeks.

Now, the market could have also taken my $20,000 in ARKK to $100,000, as it did from last March to this February. No question that is possible. But we don't know when that will happen and all that research isn't going to give us the answer.

I'm willing to write off ARK not because I think they are wrong (they might very well be right), but because I don't know, and neither does ARK, and neither do you.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by donaldfair71 »

invester123 wrote: Mon Mar 08, 2021 3:38 pm If you had 10k to drop right now what would you do in the current market? Dump it into total market fund? Drop it into a long term hold at a "discount" or something else?

5k in VTSAX
5k in VFWAX

I don’t know if these will do better or worse than alternative options. But I believe the stock market to be my best chance to build wealth, and I believe these are my best options within those parameters (or similar total market funds).
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by watchnerd »

FIBoston wrote: Mon Mar 08, 2021 4:05 pm I'm curious if any of the folks on here who are so willing to write Ark off have actually taken the time to research the funds themselves. Do folks making the comparisons between Ark and other past high performing funds know that Ark is a 100% transparent fund that (by law) shares all of their research freely and publicly - something that other funds never did? Do they realize Ark is pretty clear about investing on a 5 year time horizon, and not on quarterly or annual returns? Do they realize that Ark's analyst structure is set up to take a holistic view of the economy, as opposed to a siloed segmentation of various market sectors? Have they listened to Cathie Wood's quarterly ITK sessions, the Ark Teams Monthly Market Update Webinars, or do they receive the daily email outlining all their trades?

I'm not an Ark fan-boy. I have a very small amount as part of my overall portfolio, but that's more because I'm passionate about innovation (especially in the Genomics space) and feel that there is enough of a chance of the next few years being strong that I'm willing to try to super-charge a very small about of my savings. But I feel that a lot of the criticism on here boils down to people basing Ark's future prospects on the past performance of other active funds. Yes - 99% (or whatever ridiculously high percentage it is) of active funds fail to outperform the market. But what if Ark is that 1%? Again, I'm not saying they are, but there is so much available material with them that it seems a bit disingenuous and uncritical to build an opinion without at least taking the time to go through that material. This feels especially relevant to these boards because Ark has recently become more and more vocally critical of both passive index funds and bond funds in general being the sole positions in a portfolio - and they have provided research and numbers to back these claims up.
But if I want to make a highly concentrated bet on the tech sector and roll the dice by taking on more risk for higher return, I could buy TQQQ and be ahead of ARKK.

So over a 5 year time horizon, all their analysis is not beating an autopilot leveraged NASDAQ play.

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

Post by JonnyDVM »

The ARK fall from grace has been swift and painful.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by langlands »

watchnerd wrote: Mon Mar 08, 2021 6:04 pm
But if I want to make a highly concentrated bet on the tech sector and roll the dice by taking on more risk for higher return, I could buy TQQQ and be ahead of ARKK.

So over a 5 year time horizon, all their analysis is not beating an autopilot leveraged NASDAQ play.

Image
QLD (2x leveraged) would be a much fairer comparison. One can compute the beta of ARKK against QQQ and I believe it's close to 2 (anyone know an easy way to do this? Portfoliovisualizer only does correlations). The performance of QLD and ARKK is remarkably similar. Here is the last 5 years:

https://www.portfoliovisualizer.com/bac ... ion2_2=100
Last edited by langlands on Mon Mar 08, 2021 7:12 pm, edited 3 times in total.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Steve Reading »

langlands wrote: Mon Mar 08, 2021 6:56 pm
watchnerd wrote: Mon Mar 08, 2021 6:04 pm
But if I want to make a highly concentrated bet on the tech sector and roll the dice by taking on more risk for higher return, I could buy TQQQ and be ahead of ARKK.

So over a 5 year time horizon, all their analysis is not beating an autopilot leveraged NASDAQ play.

Image
QLD (2x leveraged) would be a much fairer comparison. One can compute the beta of ARKK against QQQ and I believe it's close to 2 (anyone know an easy way to do this? Portfoliovisualizer only does correlations).
https://www.portfoliovisualizer.com/fac ... sion=false
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by langlands »

Steve Reading wrote: Mon Mar 08, 2021 6:59 pm
langlands wrote: Mon Mar 08, 2021 6:56 pm
watchnerd wrote: Mon Mar 08, 2021 6:04 pm
But if I want to make a highly concentrated bet on the tech sector and roll the dice by taking on more risk for higher return, I could buy TQQQ and be ahead of ARKK.

So over a 5 year time horizon, all their analysis is not beating an autopilot leveraged NASDAQ play.

Image
QLD (2x leveraged) would be a much fairer comparison. One can compute the beta of ARKK against QQQ and I believe it's close to 2 (anyone know an easy way to do this? Portfoliovisualizer only does correlations).
https://www.portfoliovisualizer.com/fac ... sion=false
Thanks Steve!

Daily regression (1700 sample points) gives 1.1 and monthly regression (75 sample points) gives 1.44 which is quite different. Hard to know what to make of that exactly, could just be noise. In any case, the fairer comparison might actually be less than 2x leveraged, which would tilt the comparison favorably towards ARKK.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by CardinalRule »

langlands wrote: Sat Mar 06, 2021 11:40 pm
totality wrote: Sat Mar 06, 2021 10:51 pm
MinnGuyInvesting wrote: Sat Mar 06, 2021 1:48 pm The way I understand it is the fixed amount of ETF shares that are available are bought and sold and thus there isn't an "increase" because it just trades at market value. If someone wants to pull out a ton out of the ETF, they would sell it at market price, and another buyer would need to buy those shares just like any stock.

Meanwhile, the real stock trades are bought and sold separately based on each stocks actual trading prices. The two prices (of the stocks collectively as a NAV) and the ETF price can vary, but usually not by much.
So there isn't a real scenario where people leaving ARK would force her to sell shares.
The number of shares of an ETF is not fixed: They are constantly being created/destroyed by some authorized party in order to keep the NAV of the fund and the ETF share price equal, so that the fund doesn't trade at a significant premium or discount.

It is definitely that case that if there is a net outflow of funds, ARKK will be forced to sell shares of something, just like any mutual fund.
I agree with the first sentence, but not the second. The point of the ETF structure is that the manager doesn't need to do anything regarding inflows and outflows. The AP's deal with that. The only time she buys or sells shares is if she wants to change the balance of stocks in her portfolio.
interesting discussion. I was recently trying to reconcile the concept of “outflows” myself as referred to in one of the WSJ articles last week. :confused

But the re­cent out­flows trig­gered sales across ARK’s funds to meet re­demp­tions, while the firm also opted to dump shares of its eas­ier-to-trade hold­ings, in­clud­ing Apple Inc. and Snap Inc., to load up on fa­vorites like Tesla.

With tech stocks con­tin­uing to fall, ETF an­a­lysts and traders worry that a com­bi­nation of broad mar­ket de­clines and ad­di­tional out­flows could cre­ate a snow­ball ef­fect across ARK’s port­fo­lio. That could po­ten­tially cause some of its more-illiq­uid, small-cap hold­ings to trade sharply lower.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Nathan Drake »

FIBoston wrote: Mon Mar 08, 2021 4:05 pm I'm curious if any of the folks on here who are so willing to write Ark off have actually taken the time to research the funds themselves. Do folks making the comparisons between Ark and other past high performing funds know that Ark is a 100% transparent fund that (by law) shares all of their research freely and publicly - something that other funds never did? Do they realize Ark is pretty clear about investing on a 5 year time horizon, and not on quarterly or annual returns? Do they realize that Ark's analyst structure is set up to take a holistic view of the economy, as opposed to a siloed segmentation of various market sectors? Have they listened to Cathie Wood's quarterly ITK sessions, the Ark Teams Monthly Market Update Webinars, or do they receive the daily email outlining all their trades?

I'm not an Ark fan-boy. I have a very small amount as part of my overall portfolio, but that's more because I'm passionate about innovation (especially in the Genomics space) and feel that there is enough of a chance of the next few years being strong that I'm willing to try to super-charge a very small about of my savings. But I feel that a lot of the criticism on here boils down to people basing Ark's future prospects on the past performance of other active funds. Yes - 99% (or whatever ridiculously high percentage it is) of active funds fail to outperform the market. But what if Ark is that 1%? Again, I'm not saying they are, but there is so much available material with them that it seems a bit disingenuous and uncritical to build an opinion without at least taking the time to go through that material. This feels especially relevant to these boards because Ark has recently become more and more vocally critical of both passive index funds and bond funds in general being the sole positions in a portfolio - and they have provided research and numbers to back these claims up.
My problem isn't so much that ARK represents actively managed growth stock ETFs, or that the premise is that it can outperform. My problem is that Cathie Wood's thesis is that she's on the "right side of change" and that "index fund investors will be wiped out and left behind". For someone that's been in the investment management industry for many decades, it's an intellectually dishonest position to take with all the data that is available. Even if she is correct in her choices and outperforms the market over the long term, her choices *WILL* become the market through index funds, and their growth will still be enjoyed by those that choose passive investments even if it's not as high as ARK funds.

Compare this to someone who *HAS* outperformed for decades through active management, such as Warren Buffet, and he will be completely upfront that while his aim is to beat the market, he does not know if he will be able to do so and that for most investors index funds are the absolute best place to be. That's a lot more truthful outlook that's based on reality and doesn't need fear mongering scare tactics to try and convince others to join his cause.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by abuss368 »

invester123 wrote: Mon Mar 08, 2021 3:38 pm If you had 10k to drop right now what would you do in the current market? Dump it into total market fund? Drop it into a long term hold at a "discount" or something else?
If I was investing $10,000, I would allocate according to our desired asset allocation and stay the course. Total Market index funds win over the long term.

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

Post by bgf »

totality wrote: Sun Mar 07, 2021 12:32 am
langlands wrote: Sat Mar 06, 2021 11:40 pm
totality wrote: Sat Mar 06, 2021 10:51 pm The number of shares of an ETF is not fixed: They are constantly being created/destroyed by some authorized party in order to keep the NAV of the fund and the ETF share price equal, so that the fund doesn't trade at a significant premium or discount.

It is definitely that case that if there is a net outflow of funds, ARKK will be forced to sell shares of something, just like any mutual fund.
I agree with the first sentence, but not the second. The point of the ETF structure is that the manager doesn't need to do anything regarding inflows and outflows. The AP's deal with that. The only time she buys or sells shares is if she wants to change the balance of stocks in her portfolio.
Yes, you're right, I phrased that poorly.

I just meant that if there are net outflows, the APs are going to drop their shares of the thinly traded parts of ARKK like a hot potato, so the overall effect is that somebody is going to sell the underlying securities. My point is that for the purposes of considering how outflows will affect illiquid holdings, the ETF structure has no special benefit.

(Unless there's a reason to believe the APs won't do that? But I don't see why not.)
I'm sure I don't totally understand how ETFs work, but I don't think this is true. I think the structure of ETFs does have a benefit. We saw it with bond ETFs during the crash. When APs act in their own self interest by selling, they do so at a spread that will be profitable given the liquidity risk. If the ETF price varies a lot from NAV it discourages investors from selling the ETF.

With a mutual fund this feedback loop doesn't exist.

Edit* well I just got to Grabiners post, and I think we're saying the same thing, which is comforting as he knows way more than I do.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by watchnerd »

CardinalRule wrote: Mon Mar 08, 2021 8:19 pm
langlands wrote: Sat Mar 06, 2021 11:40 pm
totality wrote: Sat Mar 06, 2021 10:51 pm
MinnGuyInvesting wrote: Sat Mar 06, 2021 1:48 pm The way I understand it is the fixed amount of ETF shares that are available are bought and sold and thus there isn't an "increase" because it just trades at market value. If someone wants to pull out a ton out of the ETF, they would sell it at market price, and another buyer would need to buy those shares just like any stock.

Meanwhile, the real stock trades are bought and sold separately based on each stocks actual trading prices. The two prices (of the stocks collectively as a NAV) and the ETF price can vary, but usually not by much.
So there isn't a real scenario where people leaving ARK would force her to sell shares.
The number of shares of an ETF is not fixed: They are constantly being created/destroyed by some authorized party in order to keep the NAV of the fund and the ETF share price equal, so that the fund doesn't trade at a significant premium or discount.

It is definitely that case that if there is a net outflow of funds, ARKK will be forced to sell shares of something, just like any mutual fund.
I agree with the first sentence, but not the second. The point of the ETF structure is that the manager doesn't need to do anything regarding inflows and outflows. The AP's deal with that. The only time she buys or sells shares is if she wants to change the balance of stocks in her portfolio.
interesting discussion. I was recently trying to reconcile the concept of “outflows” myself as referred to in one of the WSJ articles last week. :confused

But the re­cent out­flows trig­gered sales across ARK’s funds to meet re­demp­tions, while the firm also opted to dump shares of its eas­ier-to-trade hold­ings, in­clud­ing Apple Inc. and Snap Inc., to load up on fa­vorites like Tesla.

With tech stocks con­tin­uing to fall, ETF an­a­lysts and traders worry that a com­bi­nation of broad mar­ket de­clines and ad­di­tional out­flows could cre­ate a snow­ball ef­fect across ARK’s port­fo­lio. That could po­ten­tially cause some of its more-illiq­uid, small-cap hold­ings to trade sharply lower.
I've also read that the ETF structure and trade disclosures make it easier to front run ARKK if it tries to establish a position over time (like a traditional active mutual fund would try do stealthily) without bumping the price, so instead ARKK may have to establish positions quickly, which can lead to it driving the price of a stock up as its buying.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by SlowMovingInvestor »

bgf wrote: Mon Mar 08, 2021 9:37 pm
I think the structure of ETFs does have a benefit. We saw it with bond ETFs during the crash. When APs act in their own self interest by selling, they do so at a spread that will be profitable given the liquidity risk. If the ETF price varies a lot from NAV it discourages investors from selling the ETF.

With a mutual fund this feedback loop doesn't exist.

Edit* well I just got to Grabiners post, and I think we're saying the same thing, which is comforting as he knows way more than I do.
I think very few retail investors are as savvy as Grabiner :happy. Even savvy investors would likely not know the NAV intra-day. They might notice the spread, but I think if most people are genuinely concerned about a 20% fall, they'll just take the spread hit. I wouldn't presume to speak for Grabiner, but in that case it seems the motivating factor was TLH, where spreads are important.

I'm still unsure about some of the mechanics of redemption/creation. Do the APs settle at the end of the day with the sponsor or do they do so immediately (or possibly at some fixed interval during the trading day) ?

ADDED: I noticed that GBTC (Bitcoin Trust) seems to trade at a discount to NAV when it's falling and at a premium when it's rising. It's not an ETF, but I think that would go against the idea that people are reluctant to sell something highly volatile when it's falling.
SlowMovingInvestor
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by SlowMovingInvestor »

Nathan Drake wrote: Mon Mar 08, 2021 9:13 pm
My problem isn't so much that ARK represents actively managed growth stock ETFs, or that the premise is that it can outperform. My problem is that Cathie Wood's thesis is that she's on the "right side of change" and that "index fund investors will be wiped out and left behind". For someone that's been in the investment management industry for many decades, it's an intellectually dishonest position to take with all the data that is available. Even if she is correct in her choices and outperforms the market over the long term, her choices *WILL* become the market through index funds, and their growth will still be enjoyed by those that choose passive investments even if it's not as high as ARK funds.
Did she actually use those phrases or phrases similar to those ? However, ARK performs, I agree completely that this is a bad position to take. Her religious (literally so) fervor for high growth stocks seems to have led to get her getting carried away.

Beyond that, it's hard for me to believe that an economy where capital (and salaries and stock option wealth) flows to a small group of companies and a few skilled people trained in those areas, while skipping over a huge portion of the economy and work force is somehow beneficial as a whole.
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