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

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

Post by surfstar »

thenextguy wrote: Fri May 07, 2021 1:22 pm
euphonious wrote: Fri May 07, 2021 12:26 pm
Thesaints wrote: Fri May 07, 2021 11:26 am
SlowMovingInvestor wrote: Fri May 07, 2021 7:22 am
Thesaints wrote: Thu May 06, 2021 11:29 pm Cathie Wood reminds me of Elizabeth Holmes, in some respects...
This is unfair. Holmes seems to have indulged in outright fraud, even if she is acquitted.

I don't think Ms. Wood is some sort of investment genius, but she seems very sincere. And even if she were not, it's no different from the puffery that active fund managers indulge in routinely. Not comparable to Holmes.
The similarity is not in the fraud elements. It is in the apparent lack of reasons why she should succeed so spectacularly and dubious qualifications. All we read is that she is a devout Christian and a mom and Laffer was her mentor at some point. Holmes was scared of needles, conveyed a Steve Jobs look & feel, and the likes of Kissinger and George Shultz supported her.
Does anyone know how much of an active role Woods actually plays in the investment decisions at ARK? Does she make investment choices, or simply sign off on the ones her analysts make? Or maybe she just lets them all do their own thing?
Well, she's the Chief Investment Officer of Ark Invest, so I imagine she gets the final say. If you watch her in interviews you get the sense she's pretty hands on.
https://youtu.be/cmva2-jIlR4?t=580

Or you could say she's just a conduit for someone else who makes the decisions...?

I guess some investors do put a lot of faith in the fund manager.
Thesaints
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Thesaints »

nisiprius wrote: Fri May 07, 2021 1:44 pm According to the article I can't find, her consistent direction is not to look for profit, but to look for the companies that are truly engaged in "disruptive innovation."

So my impression is that she is closely and directly involved in investment decisions. In particular, she is responsible for the decision to put "disruptive innovation" above all else, and to hire people who can help her find companies that engage in disruptive innovation as she understands it.
That's a very important point. In a way, she is running her funds in the same spirit VC looks to invest. Except that VC does it pre-IPO and she does it after IPO and that makes a world of difference.
wickywack
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by wickywack »

nisiprius wrote: Fri May 07, 2021 1:46 pm
chris319 wrote: Fri May 07, 2021 1:37 pm
The act says a "diversified" fund cannot have more than 5% of its holdings in a single stock. It can have more than that, but then it has to say in its literature, "the fund is not diversified."
I don't think that's the way it works. A fund has to declare itself as "diversified" or not at startup. A change from one to the other has to be voted on.
I didn't express myself clearly in my posting and I'll go back and edit it.
I'm curious - does this apply to index funds as well? Apple is currently 4.5% of VTSAX. If it crosses 5%, does Vanguard (and every other total market fund) need to add a disclaimer?
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by chris319 »

I watched an interview with Cathie Wood. She seems intent on finding the Next Big Thing to invest in. This violates my first rule of investing: "Don't try to strike it rich". This is not the way stocks are selected for SPX and NDX, and could explain why so many fund managers underperform the indices.

In the interview she was big on Crispr and described the company and its innovations almost breathlessly. I'll wait for Crispr to make it into one of the indices.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by chris319 »

I'm curious - does this apply to index funds as well? Apple is currently 4.5% of VTSAX. If it crosses 5%, does Vanguard (and every other total market fund) need to add a disclaimer?
The 1940 act was passed before index funds became popular. I didn't see any distinction between index funds and regular funds.

Answer: I don't know.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by chris319 »

Here is my 29th rule of investing: Never buy a mutual fund where the fund manager gives interviews on YouTube.
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hnd
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by hnd »

chris319 wrote: Fri May 07, 2021 3:09 pm Here is my 29th rule of investing: Never buy a mutual fund where the fund manager gives interviews on YouTube.
GULP

https://www.youtube.com/watch?v=RxDKy4ZuWA0
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by chris319 »

hnd wrote: Fri May 07, 2021 3:18 pm
chris319 wrote: Fri May 07, 2021 3:09 pm Here is my 29th rule of investing: Never buy a mutual fund where the fund manager gives interviews on YouTube.
GULP

https://www.youtube.com/watch?v=RxDKy4ZuWA0
With millions of dollars under management, you'd think they could shell out $100 for a decent microphone. The audio on that interview is unlistenable.

That said, there are some very good interviews with Jack Bogle on YouTube (with good audio, too). However, I think Jack had left Vanguard before YouTube was even a thing.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by dogagility »

The ARK funds appear to invest in companies that focus on disruptive technology. By ?its very nature, this approach will be hit or miss. Volatile.

The funds might outpace the market. Do the fund managers have the requisite patience and knowledge to select companies? Will the return make up for the fees?

Do I want the volatility? No. Do I think the juice (return) will overcome the squeeze (fees; poor management)? Not convinced. Because of these factors, ARK funds won't be a significant portion of my portfolio. And this means... investing in the funds for my goals is pointless.
The more flexibility you have the less you need to know what happens next. -- Morgan Housel
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by chris319 »

If this article doesn't convince you of the superiority of index funds ...

https://www.cnbc.com/2021/05/06/cathie- ... -year.html

The photo caption identifies what Cathie thinks will be "the "next big sector boom". In other words, she's trying to strike it rich.

I think her shareholders would be just as happy (and rewarded) if she loaded up on AAPL, MSFT, AMZN and GOOG/GOOGL.
The only person you have to please in life is yourself.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by langlands »

chris319 wrote: Fri May 07, 2021 3:55 pm If this article doesn't convince you of the superiority of index funds ...

https://www.cnbc.com/2021/05/06/cathie- ... -year.html

The photo caption identifies what Cathie thinks will be "the "next big sector boom". In other words, she's trying to strike it rich.

I think her shareholders would be just as happy (and rewarded) if she loaded up on AAPL, MSFT, AMZN and GOOG/GOOGL.
If ARKK loaded up on AAPL, MSFT, AMZN and GOOG/GOOGL, investors would pull out of the fund and it would be shuttered within the month. ARKK has an expense ratio of 0.75%. Investors are paying for a bespoke investment service, and buying FANG isn't that service. Buying FANG is a service provided by numerous passive tech index funds that offer an expense ratio around 0.1%. This is like telling a silver ETF to load up on gold. Every fund has a prospectus and a purpose and investors in that fund presumably have read it and believe the fund adds value to their portfolio.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Thesaints »

The issue is that those "disruptive technologies" are already priced accordingly after their IPO. Listed corporations have to provide very comprehensive info about their business.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by chris319 »

If ARKK loaded up on AAPL, MSFT, AMZN and GOOG/GOOGL, investors would pull out of the fund and it would be shuttered within the month.
Read the article:
Nearly $770 million has left Ark Innovation in the last week.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by langlands »

chris319 wrote: Fri May 07, 2021 4:27 pm
If ARKK loaded up on AAPL, MSFT, AMZN and GOOG/GOOGL, investors would pull out of the fund and it would be shuttered within the month.
Read the article:
Nearly $770 million has left Ark Innovation in the last week.
Yes. People are pulling out of the fund because they no longer wish to be exposed to ARKK's investment thesis. I'm saying that if ARKK did what you said, ARKK would have no investment thesis. There would be no reason whatsoever to be an ARKK investor. It sounds like your problem is with active management in general. What you fail to realize is that some investors feel that certain active managers add value. There is no investor in the world who would pay active management fees to a manager who invested passively.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by luckyducky99 »

langlands wrote: Fri May 07, 2021 4:44 pm.There is no investor in the world who would pay active management fees to a manager who invested passively.
Sorry, can’t resist:

https://www.guggenheiminvestments.com/m ... syx-sp-500

SP500, ER 2.43 :shock:
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by HomerJ »

chris319 wrote: Fri May 07, 2021 3:55 pm If this article doesn't convince you of the superiority of index funds ...

https://www.cnbc.com/2021/05/06/cathie- ... -year.html

The photo caption identifies what Cathie thinks will be "the "next big sector boom". In other words, she's trying to strike it rich.

I think her shareholders would be just as happy (and rewarded) if she loaded up on AAPL, MSFT, AMZN and GOOG/GOOGL.
She thinks Roku is "disruptive technology"?
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by protagonist »

nisiprius wrote: Sat Feb 13, 2021 7:48 pm Also, why are we reading about ARKK? Because it has outperformed. The question is, who was posting about ARKK in the forum in 2018?

The latest SPIVA scorecard, for US mid-year 2020, over the preceding 15 years...

87% of actively managed funds underperformed the S&P Composite 1500 index.

87%!

But of course nobody writes about those.

Image
Does this analysis somehow take into account survival bias? Because if not, I would suspect that the actual result must be higher than 87%.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by langlands »

luckyducky99 wrote: Fri May 07, 2021 5:22 pm
langlands wrote: Fri May 07, 2021 4:44 pm.There is no investor in the world who would pay active management fees to a manager who invested passively.
Sorry, can’t resist:

https://www.guggenheiminvestments.com/m ... syx-sp-500

SP500, ER 2.43 :shock:
Wow that is horrendous. From reading a little, it seems that this is because these products are mostly sold indirectly through financial advisors and brokers to unsuspecting retail investors? Very sad.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by chris319 »

some investors feel that certain active managers add value.
It doesn't matter what investors think. Do active managers deliver that value? Apparently 87% do not.

The risk is that a fund manager who is hot today may lose his/her magic touch going forward.

Read any row of the above table from left to right. Note that the percentages increase with the passage of time.
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langlands
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by langlands »

chris319 wrote: Fri May 07, 2021 6:03 pm
some investors feel that certain active managers add value.
It doesn't matter what investors think. Do active managers deliver that value? Apparently 87% do not.

The risk is that a fund manager who is hot today may lose his/her magic touch going forward.

Read any row of the above table from left to right. Note that the percentages increase with the passage of time.
Yes, I'm aware of all this. I'm on the Bogleheads forum. The argument against active management as a whole is easy to make.

My question is very simple: what do you think would happen if ARKK suddenly started passive indexing into FANG? It seems you think this would be great for their business and that their AUM would balloon. If so, you have a flawed understanding of the active management business.

This isn't that complicated. Presumably, you find slot machines a dumb way to build wealth. So it would be obviously good for all the patrons if the casino got rid of all their slot machines right? Well the patrons are going to the casino precisely to play the slot machines, so no it would be bad for their business. Regardless of what you think of ARKK's investment thesis, it's hopefully not hard to understand that taking away the precise reason your investors are investing in your fund is not a great business move.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by chris319 »

It seems you think this would be great for their business and that their AUM would balloon.
You don't know what I think. You happen to be incorrect.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by grabiner »

chris319 wrote: Fri May 07, 2021 1:37 pm
The act says a "diversified" fund cannot have more than 5% of its holdings in a single stock. It can have more than that, but then it has to say in its literature, "the fund is not diversified."
I don't think that's the way it works. A fund has to declare itself as "diversified" or not at startup. A change from one to the other has to be voted on.
But the legal definition of a diversified fund is somewhat looser; the fund must have 75% of its assets in holdings which are not more than 5% from any individual issuer (except the US government; a diversified bond fund can hold more than 25% Treasuries). Thus a diversified fund can have 10% of its holdings in one stock, but not 10% each in three stocks.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by langlands »

chris319 wrote: Fri May 07, 2021 6:53 pm
It seems you think this would be great for their business and that their AUM would balloon.
You don't know what I think. You happen to be incorrect.
OK, so you think this would be poor for business and their AUM would decrease.

This is what started this exchange:
chris319 wrote: Fri May 07, 2021 3:55 pm I think her shareholders would be just as happy (and rewarded) if she loaded up on AAPL, MSFT, AMZN and GOOG/GOOGL.
If shareholders would be just as happy if she loaded up on FANG, the AUM would not completely collapse if she did that. You seem to be contradicting yourself.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by TropikThunder »

SlowMovingInvestor wrote: Fri May 07, 2021 7:22 am Portfolio: 50% DOGE, 10% SPACs, 10% Frozen OJ futures, 10% MOON ETF, 10% NFTs , 5% FOMO ETF, 5% New Jersey Delis with $100M market cap :)
Randolph and Mortimer would like a word.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by chris319 »

OK, so you think
Stop right there. Don't try to put words in my mouth.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by TropikThunder »

langlands wrote: Fri May 07, 2021 7:16 pm
chris319 wrote: Fri May 07, 2021 6:53 pm
It seems you think this would be great for their business and that their AUM would balloon.
You don't know what I think. You happen to be incorrect.
OK, so you think this would be poor for business and their AUM would decrease.

This is what started this exchange:
chris319 wrote: Fri May 07, 2021 3:55 pm I think her shareholders would be just as happy (and rewarded) if she loaded up on AAPL, MSFT, AMZN and GOOG/GOOGL.
If shareholders would be just as happy if she loaded up on FANG, the AUM would not completely collapse if she did that. You seem to be contradicting yourself.
I think you're overestimating the thought process of a lot of the performance chasers that flowed into ARK. A good chunk of them IMO have no idea (nor do they care) what ARKK actually holds, they just see that it shot up in 2020 and jumped aboard for the ride like with any other meme stock/fund. If they switched to a large FANG allocation, all that would matter is whether the performance continued. How many GME buyers actually know what that company does, for example?
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by SlowMovingInvestor »

TropikThunder wrote: Fri May 07, 2021 7:18 pm
SlowMovingInvestor wrote: Fri May 07, 2021 7:22 am Portfolio: 50% DOGE, 10% SPACs, 10% Frozen OJ futures, 10% MOON ETF, 10% NFTs , 5% FOMO ETF, 5% New Jersey Delis with $100M market cap :)
Randolph and Mortimer would like a word.
They're my inspiration !

Interestingly, the MOON ETF has done significantly better than ARKK since it's inception and YTD.
Portfolio: 50% DOGE, 10% SPACs, 10% Frozen OJ futures, 10% MOON ETF, 10% NFTs , 5% FOMO ETF, 5% New Jersey Delis with $100M market cap :)
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by langlands »

TropikThunder wrote: Fri May 07, 2021 7:30 pm
langlands wrote: Fri May 07, 2021 7:16 pm
chris319 wrote: Fri May 07, 2021 6:53 pm
It seems you think this would be great for their business and that their AUM would balloon.
You don't know what I think. You happen to be incorrect.
OK, so you think this would be poor for business and their AUM would decrease.

This is what started this exchange:
chris319 wrote: Fri May 07, 2021 3:55 pm I think her shareholders would be just as happy (and rewarded) if she loaded up on AAPL, MSFT, AMZN and GOOG/GOOGL.
If shareholders would be just as happy if she loaded up on FANG, the AUM would not completely collapse if she did that. You seem to be contradicting yourself.
I think you're overestimating the thought process of a lot of the performance chasers that flowed into ARK. A good chunk of them IMO have no idea (nor do they care) what ARKK actually holds, they just see that it shot up in 2020 and jumped aboard for the ride like with any other meme stock/fund. If they switched to a large FANG allocation, all that would matter is whether the performance continued. How many GME buyers actually know what that company does, for example?
For sure, they could sustain it for awhile. I think ARKK would immediately lose all their institutional investors and anyone with any sophistication about ETF's and expense ratios. But the reddit crowd might stick around. She probably could continue charging 0.75% to retail investors. I think the key though is that it was her decision to switch to FANG and that at any moment, she might switch back to her old style. People are still paying for her investment acumen, even if temporarily it's identical to indexing. If she publicly announced that from now on ARKK would just follow the SPY, I think even the dumbest retail investors would exit. Maybe not even because of the expense ratio, but just because it's boring. An overpriced closet indexer just doesn't really appeal to anyone.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by langlands »

SlowMovingInvestor wrote: Fri May 07, 2021 7:50 pm
TropikThunder wrote: Fri May 07, 2021 7:18 pm
SlowMovingInvestor wrote: Fri May 07, 2021 7:22 am Portfolio: 50% DOGE, 10% SPACs, 10% Frozen OJ futures, 10% MOON ETF, 10% NFTs , 5% FOMO ETF, 5% New Jersey Delis with $100M market cap :)
Randolph and Mortimer would like a word.
They're my inspiration !

Interestingly, the MOON ETF has done significantly better than ARKK since it's inception and YTD.
MOON is doing a bit better YTD. Since inception, ARKK has been killing it though.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by SlowMovingInvestor »

langlands wrote: Fri May 07, 2021 7:53 pm
SlowMovingInvestor wrote: Fri May 07, 2021 7:50 pm
Interestingly, the MOON ETF has done significantly better than ARKK since it's inception and YTD.
MOON is doing a bit better YTD. Since inception, ARKK has been killing it though.
Since MOON's inception Mid Nov 2020 ? No. Looking at charts (ignoring dividends reinvested, which probably are low for both funds), ARKK is up around 10% since then, MOON around 32 %. On an annualized basis, I would guess MOON's performance over it's lifetime beats out ARKK's over it's lifetime.

Not that I'm advocating MOON ETF, just an amusing observation.
Portfolio: 50% DOGE, 10% SPACs, 10% Frozen OJ futures, 10% MOON ETF, 10% NFTs , 5% FOMO ETF, 5% New Jersey Delis with $100M market cap :)
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by txhill »

Cathie Wood's biggest weakness is that she doesn't meme or tweet with sufficient abandon. She really could fire up her base like no other if she wanted to. Instead she is legitimately trying to pick disruptive tech. Which I respect a lot, but let's face it, this is a meme-driven economy now!
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by langlands »

SlowMovingInvestor wrote: Fri May 07, 2021 8:05 pm
langlands wrote: Fri May 07, 2021 7:53 pm
SlowMovingInvestor wrote: Fri May 07, 2021 7:50 pm
Interestingly, the MOON ETF has done significantly better than ARKK since it's inception and YTD.
MOON is doing a bit better YTD. Since inception, ARKK has been killing it though.
Since MOON's inception Mid Nov 2020 ? No. Looking at charts (ignoring dividends reinvested, which probably are low for both funds), ARKK is up around 10% since then, MOON around 32 %. On an annualized basis, I would guess MOON's performance over it's lifetime beats out ARKK's over it's lifetime.

Not that I'm advocating MOON ETF, just an amusing observation.
I thought you meant MOON since inception vs. ARKK since inception. Yes, you are correct.

Since MOON has been around for just about 6 months, its annualized return is about 70%. Yeah, it's hard to beat that.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by jackbeagle »

SlowMovingInvestor wrote: Mon Mar 08, 2021 12:07 pm
jay22 wrote: Mon Mar 08, 2021 10:29 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.
By virtue of a fund even HAVING a 90 year record, it is almost a certainty that there will be an aversion to tech and emerging markets. Let's just call a spade a spade - anyone continuing a legacy like that will use anything to justify their unfounded skepticism and fear of high returns.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by firebirdparts »

Well, the W’s seem to justifying themselves by performance so far. There’s not a whole lot else they can do.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by RXfiles »

luckyducky99 wrote: Fri May 07, 2021 5:22 pm
langlands wrote: Fri May 07, 2021 4:44 pm.There is no investor in the world who would pay active management fees to a manager who invested passively.
Sorry, can’t resist:

https://www.guggenheiminvestments.com/m ... syx-sp-500

SP500, ER 2.43 :shock:
My 401ks snp500 index ER is 0.5% and it drives my insane everytime I think about it....
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Nathan Drake »

I will say it again, Cathie Wood is either completely oblivious to the realities of the market or she is a charlatan. She talks about "being on the right side of change", how index fund investors will be "wiped out", and how most companies are "value traps".
  • Regarding "right side of change"....nobody knows that. Not a 20 something analyst with a political science degree on her team. Companies investing in exciting buzzwords often never see those buzzwords materialize, or they were overstating their unique contributions to the field and there are many other competitors doing similar things. Is VW on the wrong side of change vs Tesla just because they were later to EVs?
  • Speaking about Index Funds....she thinks that investors will do poorly or get wiped out... There will only be a handful of big winners in this coming disruptive era of change....Ummm...she is obviously again not well versed in market history or a charlatan. Index funds by their very nature "own the market". If she's right, her performance could be better (as long as she gets enough predictions right), but index funds won't necessarily do poorly. There is very high turnover on the indexes across decades. This is a feature, not a bug. Inevitably the investor will end up still performing extremely well even holding a basket full of loser stocks. Again, we cannot predict who those will be in advance.
  • And finally, "Value Traps". See point above. There will be many "Value Traps" in an index fund. The winners make up for them. What about "Growth Traps?" Companies with pie in the sky, lofty valuations, with no meaningful way to become profitable. The Amazons and Netflixes of the world are the exceptions. Investors in growth companies think everything can fit into this ever increasing revenue (regardless of profits) business model. This is going to end poorly for so many people investing in these "Growth Traps" that crater to nothing in the long-term and go nowhere.
If Cathie Wood were more honest and modest in her approach, she would have my respect a lot more. I do not give her any credit for her recent string of short-term success. It's luck. We're in an era of social media and she plays that game extremely well. I give her credit for marketing. COVID gave her basket of stocks a very nice windfall, and the government (through QE and stimulus) has increased speculation from retail to obscene levels (further benefiting her extremely speculative plays). Long-term, she does not have any special insight into any of these companies and her fund will be a failure. She will get a few right, but most will be wrong and underperform the market. She will do horribly in an increasingly inflationary environment.
Last edited by Nathan Drake on Sat May 08, 2021 1:01 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 nisiprius »

jackbeagle wrote: Fri May 07, 2021 8:32 pm...By virtue of a fund even HAVING a 90 year record, it is almost a certainty that there will be an aversion to tech...
What do you think "tech" is? Do you think there was no "tech" before the Internet?

The hottest stock of 1929 was the Radio Corporation of America (one of the first of all electronics companies).

The hot stocks of the 1960s included Digital Equipment Corporation, IBM, Polaroid, Texas Instruments (first commercial solid-state devices), Xerox. People talked about "the -onics firms" the way they talked about "dot-coms" in the 1990s.

There has always been a coterie of investors who want to have their money in the technology pioneers.

It's just that any established technology is no longer seen as hot new technology because... it isn't hot new technology any more.
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chris319
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by chris319 »

Speaking about Index Funds....she thinks that investors will do poorly. or get wiped out.
Talk like that sets off my B.S. detector.

Of course she has an agenda in saying it.
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TomatoTomahto
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by TomatoTomahto »

Nathan Drake wrote: Sat May 08, 2021 12:28 pm Is VW on the wrong side of change vs Tesla just because they were later to EVs?
I agree with a lot of your post, but in this short snippet, I’d say that “VW is on the wrong side of change” because their shameful diesel emissions cheating showed how they were willing to turn engineers into liars.
I get the FI part but not the RE part of FIRE.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Nathan Drake »

TomatoTomahto wrote: Sat May 08, 2021 12:56 pm
Nathan Drake wrote: Sat May 08, 2021 12:28 pm Is VW on the wrong side of change vs Tesla just because they were later to EVs?
I agree with a lot of your post, but in this short snippet, I’d say that “VW is on the wrong side of change” because their shameful diesel emissions cheating showed how they were willing to turn engineers into liars.
Maybe so. But are companies that were unethical in the past always destined to be unethical?

Companies, like people, are capable of change. Arguably a lot moreso, since companies are just collections of people (and leadership can change) whereas the individual has genetic traits that are fixed in stone.

Maybe VW took their lesson learned from that debacle and is making significant strides to be a better company as a result. That's how I perceive the current leadership of VW
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TomatoTomahto
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by TomatoTomahto »

Nathan Drake wrote: Sat May 08, 2021 1:00 pm Maybe VW took their lesson learned from that debacle and is making significant strides to be a better company as a result. That's how I perceive the current leadership of VW
I probably shouldn’t have gone OT, so apologies. I hope that your perception turns out to be accurate.

Disclosure: owned 3 VWs in the past; wife owns a Porsche and she had a miserable experience with Audi corporate (clearly she’s more forgiving than I am).
I get the FI part but not the RE part of FIRE.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Wade Garrett »

txhill wrote: Fri May 07, 2021 8:08 pm let's face it, this is a meme-driven economy now!
so true, sadly
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by stormcrow »

So at this point ARKK has given up six months of gains, and is now underperforming the S&P 500 for the same time period. Of course, over the past year it's still quite a bit ahead.

I really feel like this (and other non-systematic managed funds) really depend on how much you believe in the manager. Is Woods' method of buying every tech meme going to generate alpha over the long term? Maybe, but I wonder if the hype is due to the overall tech/IPO/SPAC craziness that's been around the past few years.
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1789
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by 1789 »

NO, she is not a star manager because star managers get it right from the beginning and not after 30 years being in industry. Otherwise its pure luck, imo. And yes i have been repeating this about her a while now.
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TheoLeo
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by TheoLeo »

Maybe it is too early, but since ARK posted this video making fun of the dumb-dumbs investing in index funds, ARKK returned 0 % and the S&P 500 returned +20 %.

https://www.youtube.com/watch?v=DqkZCzjdtbw
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by sureshoe »

Bwlonge wrote: Sat Feb 13, 2021 8:14 pm Forget ARK for a second though. Even something as mundane as QQQ. If you invested everything in QQQ over the last 20 years over VTI, you would have come out way ahead. I'm assuming similar for VGT.

At this point, why wouldn't a broad tech fund get the same respect as VTI? I'm thinking that technology is a fundamental "sector" in how we've developed and will continue to develop. I feel like at this point if you're waiting for tech to come back down to VTI levels, you're doing the same thing as someone not investing because they expect the market to crash any second.

But then take a step forward on tech and move back to the ARK funds. Genomics, automation, fin tech, space exploration- all emerging technology. By throwing down on an ARK fund with .75 ER, its like hiring a team of analysts to pick winners as the fields develop. Companies that do or will do incredibly valuable things. Of course, it requires conviction on my part to believe in the manager's ability to pick and manage. But if I was to hire someone for a tech fund, it would be for emerging tech, not establish tech.

To grossly oversimplify with a poor analogy, 100% VTI strikes me as like not buying blu ray because the VCR plays movies just fine and thinking something else will just replace blu ray some day. Yeah, but, you get the value from blue ray then move on to the next emerging sector.

I don't own any ARKs yet, but am planning to go 30% allocation next week, only because I can't allocate more in my 403b.
You are making the most classic investor mistake that can be made. You are picking stocks after the fact. Why not invest all your money in Laser Disc?
Why not invest all your money in High Def DVD? Oops, picked wrong. Bankrupt. I mean, it's easy to say OBVIOUSLY Blu Ray is the successor, but people forget all the money wasted on those interim techs. Heck - following your logic, I should be putting all my money in Amazon. It has crushed all those funds in the FACE.

Truth be told, I have no clue what ARKK or QQQ are. I have no favor or disdain for them. I pulled them up, and don't understand. Both have underperformed VTI in the last 6 months. QQQ has underperformed for the last year. Also QQQ seems to have underperformed for VTI for at least 5-8 years in the 2000s, but I only glanced. ARKK doesn't have a long track record outside its recent, momentous dive.

Anyway - the question I always ask is this: what information do you have that the 10000s of automated investo-bots don't have? If there was a realistic way to out-perform the broad market reliably, I think those other investors would be in these vehicles. The market is littered with people who think they have the next best investment.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by jeffh19 »

I didnt read the entire thread, and I like the idea of ARK funds, as investing in sectors that we think are gonna have a lot of big growth in the future. I dont own any, but I cant say it hasn't crossed my mind. but:

I'm pretty sure I read Cathie Wood wasn't that successful or had some failed ventures/investment firms before. Confirm this yourself, but I've seen a few people point out her less than stellar track record for quite some time before ARK.

She is heavy into Tesla. 10% in most funds, and I think they redid the fund prospectus so they can hold more than 10% of a single stock to hold more Tesla. We all know Tesla's P/E ratio is crazy high, so you're counting on Tesla to continue to go parabolic past what its already done. As a former Tesla owner, someone who loved it and would love to have another, I feel the FSD/robo-taxi thing is a LONG LONG way away if it ever happens. Thats not really as much of a knock on Tesla as it comes off too. Even if Tesla accounts for an infinite amount of situations that can happen in the world on the road for an infinite amount of time, I dont think I see the government quick to approve driverless cars either. Thats an entirely different discussion. I do feel like a lot of Elon/Tesla is marketing/Elon speak about potential. I also think he's a genius and a pioneer and so on. People seem to include Space X, Neuralink, Starlink under teh Tesla umbrella but I dont think thats factual at all as far as $$$. You're counting on so many things and ht market to do what you want. There was a strong rumor last week Tesla is already sold out of all production capability for Q2 already, and the stock went down over 2% that day. They dont make much from selling cars, talks are they cant rely on selling energy credits forever. Selling cars is a hard business to be in and make money. They are investing a ton into their product and company though and they are a company like Apple where the brand is extremely strong. Speaking of Apple, an Apple EV in 5-10 years could take a major bite out of Tesla too. Who knows, I sure dont.

Speaking of Tesla and all, how much of her returns and performance are simply from Tesla going parabolic? How would her portfolios do without it? Obviously she gets credit for picking Tesla and riding that wave, but any fund that held a lot of Tesla the last couple years has probably done very well, and its not like its some hidden stock few investors knew about.

While It seems so obvious that these tech/automation/ai/space things are so heavily the future too. Thats what lures me in. I've read people on here I think it was say that they are in the AI biz for their career and disagree with the companies she's invested in too. Do a search on here to get more opinions.

Automatically deduct their much higher expense ratios and if the market tanks, her stocks might take a much bigger hit.

You want to talk returns....look at this year. ARKK today is down 4.5% and down about -11% for the year, while VTI/VTSAX is up about 12% for the year. You never ever know, which is also why total market funds should at least be the core of your portfolio. I dont think theres anything wrong with throwing some money on the side in if you really believe in it.

I think its an interesting discussion for sure, I do think these sectors will perform well in the future. Time will tell.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Lee_WSP »

1789 wrote: Wed Mar 24, 2021 1:59 pm Why can't active manager do better in down turns or in recessions? Isn't that the whole point of active management?
Vanguard'w Wellington fund is the only fund that has historically done so, but it's comparison is a ~~60/40 portfolio
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Mountain Doc
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by Mountain Doc »

This thread is another amazing example of why chasing recent performance is so dangerous. This thread was literally started at the VERY top for ARKK, and since then it is down 34% while VTI is up 4%.
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Re: Why the disdain for managed funds like ARKK that destroy total market funds?

Post by surfstar »

The ARKK is sinking!
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