Want To Bet Against Cathie Wood? There's A New ETF For That

A new exchange-traded fund offers the opportunity to bet against one of the top stock pickers of the last five years, Cathie Wood.

What Happened: The Tuttle Capital Short Innovation ETF SARK opened for trading Tuesday. The ETF is an actively managed ETF that attempts to achieve the inverse of the return of the ARK Innovation ETF ARKK for a single day.

“This distinctive exposure allows investors to potentially profit from a decline in a portfolio of companies involved in disruptive industries such as electric vehicles, next-gen internet, genomics and fintech,” the press release says.

The Ark Innovation ETF holds positions in 44 stocks. The top holdings in the ETF are Tesla Inc TSLA, Teladoc Health TDOC, Coinbase Global COIN, Unity Software U, Roku Inc ROKU and Zoom Video Communications ZM.

“Whether you believe that the current bull thesis for transformational industries is stretched or you are looking to provide protection to an existing portfolio of high-growth stocks, SARK is a potentially attractive opportunity worth exploring,” Tuttle Capital Management CEO Matthew Tuttle said.

Related Link: Why Cathie Wood Launched Ark Funds 

Why It’s Important: Tuttle told Benzinga there is demand for a short Ark ETF.

“There are currently over 30 million shares short on ARKK so there is massive demand,” Tuttle told Benzinga.

Tuttle points to several recent moves by Ark Funds as reasons for an inverse ETF noting that the buying and selling of Zillow Group Inc Z by Ark “was not a good look.”

Tesla makes up 11% of the ETF, which could be worrisome as Tuttle notes CEO Elon Musk “is unpredictable.”

“Many investors with whom we speak, including financial advisors, are cautious on current valuations for unprofitable innovative companies,” Tuttle said.

Tuttle Capital Management offers several ETFs including the first available de-SPAC pure-play ETFs that allow investors to bet on the long or short side. The De-SPAC ETF DSPC holds 25 of the largest de-SPAC companies by market capitalization for up to 12 months after the merger is completed. The Short De-SPAC ETF SOGU holds short positions in the same 25 de-SPAC companies.

The company launched the first actively-managed pre-deal SPAC ETF in December 2020 with The SPAC and New Issue ETF SPCX.

ARKK Performance: The Ark Innovation ETF is one of the best performing ETFs of the last five years with a return of 538.7%. The ETF is up 174.8% over the last three years.

The ETF has attracted large inflows from investors given the notoriety of Wood beating the market and timing purchases of Tesla and other high-growth stocks well.

ARKK has seen its performance fall with tech stocks falling on valuation concerns and several ill-timed buy and sells from Wood.

The ETF is up 22.8% over the last year, but down 0.9% year-to-date.

While ARKK has outpaced the broader S&P 500 for many years, the fund now trails in 2021 by a considerable margin with the SPDR S&P 500 Global SPY up 27% year-to-date.