Cathie Wood, the CEO of Ark Invest, has made a strategic decision to completely eliminate her flagship innovation fund’s exposure to China. This move comes as the Chinese market experiences an economic slowdown. Wood, known for her tech investments, has chosen to consolidate her portfolio around her favorite bets, such as Tesla, Coinbase, Roku, and Zoom, during this market downturn.
Speaking during a prerecorded investor webinar, Wood explained, “As we always do during bear markets, we concentrated our strategies towards our highest conviction names and the Chinese names, in particular, came out one by one as we were concentrating so that now, at least in the flagship strategy, we do have no exposure to China.” Previously, Ark Innovation ETF, which manages nearly $9 billion in assets, had owned shares in Chinese tech giant Tencent and property site KE Holdings. However, Wood’s perception of China changed when Beijing began tightening its grip on the economy and the tech sector. She expressed concern about China’s real estate market and the massive amounts of debt accumulated after years of rapid expansion.
Ark Fintech Innovation ETF still holds a small stake in Chinese e-commerce company JD.com, but it has divested from other Chinese names like Pinduoduo and Tencent. Wood did mention the possibility of reintroducing shares tied to China in the future, but only after the country overcomes its current challenges and the market enters a new bull cycle.
Despite the China divestment, Wood’s flagship fund has performed exceptionally well this year, with its top holdings recovering from previous losses caused by rising interest rates. As of now, ARKK has posted a gain of over 50% in 2023.
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