US stocks posted their worst first-half performance since 1970 as inflation fears, Fed rate hikes and slowing economic growth weighed on markets.
After years of outperformance, growth and high beta were the worst performers of the year, according to the S&P Dow Jones indices. Spooked by a hawkish Fed, many investors took money off the table in June. However, two funds in ARK Invest’s range of active ETFs continued to attract inflows: the ARK Fintech Innovation ETF (ARKF) and the ARK Next Generation Internet ETF (ARKW).
ARKF recorded net inflows of $31 million in June and ARKW received $1 million during the month. Year-to-date net outflows for ARKF and ARKW are $87 million and $455 million, respectively, according to VettaFi.
ARKF invests in reputable companies committed to the theme of fintech innovation, defined as the introduction of a new technology-enabled product or service that potentially changes the way the financial industry works. This includes transactional innovations, blockchain technology, risk transformation, frictionless finance platforms, customer-facing platforms and new intermediaries, according to the fund’s website.
Businesses within ARKW are focused on moving the foundations of technology infrastructure to the cloud and stand to benefit from this, enabling mobile, new and local services, such as businesses that depend on or benefit from the increased use of technology, infrastructure and shared services, internet-based products and services, new payment methods, big data, internet of things, distribution and social media, according to the fund’s website.
June was a remarkable month as all areas and sectors of the market struggled, including value stocks and energy, which both showed more resilience earlier in the year.
“We have definitely entered a bear market this month as higher inflation, higher interest rates and a slowing economy pushed the S&P 500 into official bear territory (down 20% from relative to its last closing high, in this case January 3, 2022 4,796.56),” Howard Silverblatt, Principal Indices Analyst, Product Management, for S&P Dow Jones Indices, wrote. “Dit to a closing low of -23.55% (3,666.77, June 16) and then tipped higher as buyers hunted for bargains, albeit with slower trading than when sellers dominated the market.”
The S&P 500 closed the month at 3785.38, down 8.39%, and it closed at -16.45% for the second quarter (the worst Q2 since the 1970s -18.87%) and – 20.58% YTD (the worst start to the year since the 1970s -21.01%), according to Silverblatt.
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