Investment Firms Bet Against Cathie Wood’s Top ETF as Tech Faltered
About two dozen money managers bought puts on Ark Innovation
The tech-focused ARKK has tumbled 29% from its February peak
Excerpt
Originally published May 27, 2021 at 11:56am EST
Cathie Wood’s recent travails have been a boon for some of her peers in money management.
About two dozen investment advisers including Balyasny Asset Management and a unit of Blackstone Group Inc. bought bearish put options during the first quarter on the Ark Innovation exchange traded fund, her firm’s main investment vehicle, regulatory filings show.
While money managers often buy puts on ETFs to protect their portfolios against market declines, the options are typically tied to passively managed index funds such as the SPDR S&P 500 ETF Trust.
Yet technology-focused Ark Innovation grew so large so quickly -- to $28 billion in mid-February from $1.9 billion at the end of 2019 -- that some managers saw the actively managed fund as a better alternative to buffer against a slump in stocks that surged during the pandemic.
“The Ark Innovation fund had a tremendous run over the course of 2020and early 2021,” Efrem Kamen, the head of New York-based Pura Vida Investments, said in an email. “However, the level of fund flows into the ETF appeared to be extreme.” […]