ARKK Goes on a Winning Streak as Benefits from the Rebalancing

NAI500
2023-07-17


$NASDAQ 100(NDX)$ rebalancing is the positive news for Cathie Wood's flagship fund, $ARK Innovation ETF(ARKK)$ . Cathie Wood's ARK Innovation ETF (ARKK) has been on the rise after the announcement that the Nasdaq 100 would rebalance its constituent weightings.

On July 7, Nasdaq announced that the Nasdaq 100 would undergo a "special rebalancing" before the market opens on July 24th. The rebalancing is intended to address "index over-concentration" in the wake of a sharp rise in the "Fantastic severn" giant tech stocks, including $Apple(AAPL)$ and $Microsoft(MSFT)$ .

ARK Innovation is primarily comprised of smaller, unprofitable tech stocks, including $Coinbase Global, Inc.(COIN)$ , $Roku Inc(ROKU)$ and $DraftKings Inc.(DKNG)$ . The only two stocks in ARK Innovation that are part of the Big Seven are $Tesla Motors(TSLA)$ (which has the largest weighting in the ETF) and $Meta Platforms, Inc.(META)$ . These big tech stocks have risen sharply this year as investors swarm into buying shares of artificial intelligence companies.

As the Nasdaq 100 rebalances, indexers will need to continue to reduce the weights of the largest market capitalization stocks and increase the small caps. On Tuesday (July 11) in local time, $Apple(AAPL)$ shares were down 0.3% with $Microsoft(MSFT)$ and Tesla down 1% and 0.2% respectively. However, components of ARK Innovation were moving higher, which is beneficial to the Cathie’s portfolio— $Zoom(ZM)$ , $Block(SQ)$ and $UiPath(PATH)$ were up 2.2%, 2.8%, as well as 3.5% respectively.

According to Data from Dow Jones Market, ARK Innovation rose 1.2% on Tuesday and was on track for its highest close since August 2022. ARK Innovation has risen for three consecutive days, gaining 6.2% in that time.


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Comments

  • GggSlimeR
    2023-07-19
    GggSlimeR
    Tha nks & Do not like my comment
  • Bel8680
    2023-07-17
    Bel8680
    ok
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