Ark Invest Reduces China Exposure to Zero
Cathie Wood’s Innovation Fund Cuts China Exposure
Ark Invest’s Cathie Wood said her flagship innovation fund has reduced its China exposure to zero as the developing market faces an economic slowdown.
Portfolio Consolidation towards Favorite Bets
The tech investor revealed that her ARK Innovation ETF, with nearly $9 billion assets under management, has exited the stocks that generate revenue from China as she consolidated her portfolio towards her favorite bets like Tesla, Coinbase, Roku, and Zoom in the market downturn.
“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,” Wood said in a prerecorded investor webinar Thursday.
Previous China Holdings
ARKK used to own shares in Chinese tech giant Tencent and property site KE Holdings. Wood said her exposure to China and other emerging markets reached about 25% in 2020 as she was impressed by China’s initial response to the pandemic.
Change in Stance on China
The innovation investor said she changed her stance on China after Beijing started to tighten its grip on the economy by cracking down the ultrawealthy and the tech sector.
Concerns about China’s Real Estate Market
The widely followed investor said she’s particularly concerned about China’s real estate market as the country incurred massive amounts of debt after over a decade of swift expansion.
Remaining Stake in JD.com
ARK Fintech Innovation ETF (ARKF) still owns a small stake in Chinese e-commerce company JD.com, but it has dumped other Chinese names like Pinduoduo and Tencent.
Potential Addition of China Shares
Still, Wood said she might add back shares tied to China as the country overcomes the challenging period and the market enters a new bull cycle.
Banner Year for Flagship Fund
Her flagship fund has had a banner year so far as her top holdings rebounded from sharp losses triggered by rising rates. ARKK is up more than 50% in 2023.