Why Cathie Wood May Have the Best Fund to Play Trump 2.0
As traders navigate the looping highs and lows of the stock market, it’s become crucial to keep our pulse on the trends that matter. Lately, the S&P 500 has had its share of ups and downs, but a slight 0.9% retreat over just two sessions has sent ripples of concern through the trading community. The CBOE VIX index, which is the notorious fear gauge of Wall Street, has spiked 11% since touching a five-month low at the week’s end. This unexpected volatility has put many traders on edge, especially after a sharp reversal in popular momentum stocks on Monday left a lingering doubt in the market’s durability. The S&P 500 slipped again on Tuesday; however, it still stands within 1% of its record high and is up an impressive 26.5% year-to-date.
Now, let’s take a closer look at the so-called Trump trade—bets on stocks poised to flourish under the influence of the president-elect’s policies. If you’ve been tracking this trend, Cathie Wood might be the name that keeps popping up, particularly with her ARK Innovation ETF (ARKK). Known for its meteoric rise during the tech and meme-stock craze at the beginning of the decade, ARKK returned a whopping 150% in 2020. It hit an all-time high above $150 in February 2021 but staggered below $40 in June when the retail frenzy came to a halt.
However, since Trump’s re-election, ARKK has sprung back, climbing up 27.6% largely thanks to a renaissance in Tesla shares, of which it has a 10% weighting. But here’s where things get exciting: Cathie’s other ETF, the Next Generation Internet ETF (ARKW), has outperformed ARKK, surging 29.5% since the election. The bigger picture reveals that ARKW holds even greater potential as a vehicle for capitalizing on the Trump 2.0 era.
Explosive Exposure: Bitcoin, Crypto, and Defense
What sets ARKW apart? Its substantial weighting in what are believed to be the strongest Trump trades. Notably, the ETF boasts an 11.5% allocation in the ARK 21Shares Bitcoin ETF (ARKB), offering a powerful backing amid Bitcoin’s meteoric rise that has pushed it to record highs. Furthermore, with a 10% stake in Tesla and nearly 5% in Palantir Technologies (PLTR), ARKW is exceptionally positioned as investors anticipate an uptick in government defense contracts.
Todd Sohn, an ETF and technical strategist at Strategas Securities, asserts, “ARKK usually gets the spotlight, but we believe ARKW is a more compelling proxy for Trump 2.0, considering its diverse crypto and defense exposures.” This comes as no surprise—understanding the key players in the market that align with political trends is essential for effective trading strategies.
Performance: What Investors Need to Know
Despite an impressive rally in ARKW and ARKK since the election, some funds are witnessing outflows. Yes, there are over 2,600 equity ETFs out there, and as the performance heats up, not all funds are immune to shifts in investor sentiment. Sohn emphasizes, “Even though we still strongly believe ARKW is one of the best proxies for Trump 2.0, we must acknowledge the market’s capricious nature.”
In summary, ARKW’s strategic mix of crypto exposure—Bitcoin, crypto derivatives like Coinbase (COIN) and Robinhood (HOOD)—coupled with their positions in Tesla and Palantir, positions it as an ideal choice for traders eager to capitalize on the present political landscape.
Final Thoughts: The Smart Money Play
As we continue to ride the tide of market fluctuations, tracking ARKW as part of your trading strategy might just prove prudent. The combination of support from emerging technologies, cryptocurrency trends, and defense stocks makes it a leading candidate for your next trade. Keep a close eye on price movements and sentiment shifts—and remember, savvy trading is all about being ahead of the trend! So, are you ready to join the ranks of trend-followers and place your bets on ARKW as Trump 2.0 takes shape?