Cathie Wood’s ARK Innovation ETF has pulled ahead of a Fidelity rival in this year’s race for top-performing exchange-traded fund. A key difference: Wood bet big on
Coinbase Global
while Fidelity shied away.
ARK Innovation,
Wood’s flagship ETF with $8.7 billion in assets, is up 66% this year, ranking first among diversified ETFs, according to data from Morningstar Direct and Investors Business Daily.
Fidelity Blue Chip Growth ETF,
up 55%, is in second place.
The funds were neck and neck a few weeks ago, but Wood is now winning the horse race, in good measure thanks to Coinbase. Shares of the crypto exchange have surged more than 300% this year; the stock accounts for more than 10% of Ark Innovation.
“It’s no secret that we are bullish on the outlook for digital assets, Bitcoin in particular,” Tom Staudt, ARK Invest’s president and CEO, told Barron’s in a recent interview. “Coinbase stands to be a beneficiary.”
Wood’s other top picks have also fared well, including
Roku,
up 158%,
UiPath,
up 99%, and
Tesla,
ahead 101%. Wood has cut Tesla considerably from more than 3.5 million shares in June to 2.6 million as of December 13. She has also been cutting her stake in Coinbase, though it remains the top holding in Ark Innovation.
Wood, of course, is rebounding from a disastrous 2022; ARK Innovation lost 67% last year, ranking dead last among mid-cap growth ETFs. This year it’s in the top 1%, according to Morningstar, on track for a worst-to-first comeback.
ARK Innovation’s long-term returns are still lagging far behind the market. The ETF is off 58% over the last three years and is up just 31% in five years, falling well behind the Nasdaq Composite Index’s 122% five-year total return.
Fidelity Blue Chip Growth is also riding the tech wave: its top 10 holdings include
Nvidia,
Meta Platforms,
and
Uber Technologies,
up 231%, 179%, and 150%, respectively.
“I believe the portfolio was well-positioned for the AI-driven rally,” Blue Chip Growth primary manager Sonu Kalra said in an email to Barron’s. Positioning in tech, particularly a large slug of Nvidia, helped the fund outperform in the third quarter, he points out.
What appears missing from the ETF is Coinbase or anything crypto related, according to its latest holding report, dated October 31.
Whether crypto even belongs in the Fidelity ETF is debatable. The ETF largely tracks the portfolio of its mutual fund sibling with the same name. Judging by its strategy, crypto doesn’t make the cut for “blue chip growth.”
Both ARK and Fidelity’s Blue Chip ETF “are having a great year,” said Todd Rosenbluth, head of research at fund analytics firm VettaFi. “These aren’t closet index strategies—you’re getting the best ideas from active managers.”
Long-term returns are what count for many investors, though, and by that measure Blue Chip Growth looks superior. The mutual fund is up a cumulative 147% over the last five years. That beats Wood’s Bitcoin-juiced ETF and the broader market, without crypto in the mix.
Write to Lauren Foster at [email protected]
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