Cathie Wood's ARKK ETF Turns Red Hot in June: Here's Why

ARK Innovation ETF ARKK, which provides thematic multi-cap exposure to “disruptive innovation”, has been on a hot streak in June. It has gained about 23%, becoming the best-performing ETF of the month.

What’s Driving the Rally?

Most of the rally came from the explosive moves in a few stock holdings of ARKK. Circle CRCL soared nearly 750% from its June 5 IPO, powered by U.S. Senate passage of the GENIUS Act, which formalizes stablecoin regulation. The stock accounts for a 5.2% share in the ARKK portfolio.

Coinbase COIN jumped nearly 30% mid-June after announcing plans to launch its own stablecoin, boosting crypto optimism. The stock occupies the second position in the ETF portfolio, accounting for 9.6% of the assets. Meanwhile, Roblox RBLX, which makes up for 7% share in the ARKK basket, rallied 8.8% on strong first-quarter results.  

Tesla TSLA, ARKK's largest holding with a 9.9% share, has been riding high in June, fueled by excitement around autonomous driving and robotaxi development. The electric carmaker launched its long-anticipated driverless robotaxi service in Austin on June 22, sending its shares up as much as 10% on June 23. Despite some recent profit-taking, ARK maintained conviction in Tesla's position (read: Capitalize on Tesla's Robotaxi Momentum With These ETFs).

Enthusiasm for generative artificial intelligence also pushed Palantir Technologies PLTR shares to new records last week. The stock has risen 8.4% so far this month. PLTR has a 4.4% share in the ARKK basket.

Reallocations by Cathie Wood

Cathie Wood, the high-profile CEO of Ark Investment Management, remains especially bullish on the transformative power of emerging technologies. "During the current turbulent transition in the United States, she believes consumers and businesses will accelerate the shift toward innovation platforms, including artificial intelligence, robotics, energy storage, blockchain, and multiomics sequencing.”

ARKK added shares in NVIDIA NVDA and BWX Technologies BWXT to ride AI and nuclear tailwinds. The purchase of more than 128,000 shares of NVDA, worth roughly $18.5 million, came on the heels of bullish guidance from its CEO, Jensen Huang, particularly around quantum computing and a pivot away from China in response to escalating export restrictions. The move reflects ARKK’s commitment to next-generation computing, even amid rising geopolitical uncertainty.

ARKK purchased more than $30 million worth of BWXT, reflecting Wood’s deepening bet on nuclear energy. The timing coincides with favorable legislative tailwinds in the United States, as nuclear energy emerges as one of the few politically viable clean energy options (read: ARK ETFs Surged Last Week: Here's Why). 

Known for backing high-growth tech stocks even in volatile times, Wood expanded its stake in Advanced Micro Devices AMD last week, acquiring 247,753 shares valued at approximately $31.4 million across three ETFs. The purchase was distributed among ARKK, ARK Next Generation Internet ARKW and ARK Fintech Innovation ARKF ETFs, underscoring ARK’s ongoing conviction in AI and semiconductor stocks. AMD is ARKK’s 12th biggest holding, accounting for 2.6% of the portfolio.

Let’s take a closer look at the fundamentals of ARKK.

ARKK in Focus

ARK Innovation ETF is an actively managed fund investing in companies that benefit from the development of new products or services, technological improvements and advancements in scientific research related to the areas of DNA technologies and genomic revolution, automation, robotics, energy storage, artificial intelligence, next generation Internet and Fintech innovation. In total, the fund holds 40 securities in its basket (read: ARK Innovation ETF Hits New 52-Week High). 

ARK Innovation ETF has gathered $6.4 billion in its asset base and charges 75 bps in fees per year from investors. It trades in an average daily volume of 12 million shares.

Conclusion

ARKK has shown a remarkable comeback after plunging 82% from its 2021 peak. It is up 23.8% so far this year, approaching a three-year high. It has handily outperformed the broad market fund’s SPY 4.1% gains. 

The latest rotations reflect a refined focus on scalable disruption and the latest rally marks the beginning of a more disciplined growth phase. If macro conditions continue to favor its core themes, ARKK is well-positioned to remain a key player in the next era of tech-driven investing.

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This article originally published on Zacks Investment Research (zacks.com).

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