An exchange-traded fund (ETF) can provide investors with an easy way to diversify their holdings while also being able to focus on specific types of stocks and investments. The ARK Innovation ETF (NYSE Arca:ARKK) has been struggling in recent years due to inflation and a worsening outlook for the economy, and speculative growth stocks as a whole haven’t been doing will, and that has weighed on the fund’s performance. Recently, however, it has been taking off.
Specifically, since Donald Trump’s election win on Nov. 5, the fund has been rallying. It has climbed around 30% over the past month, as investors have become more bullish on riskier types of investments, including crypto. And the fund, run by Cathie Wood, can stand to benefit from the rising popularity of Bitcoin, which recently topped $100,000. Plus, Trump’s close relationship with Tesla (NASDAQ:TSLA) CEO Elon Musk has also made the electric vehicle maker’s stock rally on the election win.
The ARK fund has the potential to be a big winner as a result of Trump’s win but it also comes with risks, as many of its top holdings, including Tesla, Coinbase (NASDAQ:COIN), and Palantir Technologies (NASDAQ:PLTR), are expensive stocks to buy right now and there is often a lot of speculation fueling their valuations.
Investors who take a position in the fund should tread carefully and remember that if economic conditions worsen, the ETF could quickly be in a free-fall yet again. But at least for the short term, conditions look ripe for the ARK fund to continue rallying higher.
