UK investors are shunning Scottish Mortgage and ARKK ETFs, as the two funds have underperformed in recent months. The Scottish Mortgage Investment Trust (SMT) is down 30% in the past year, while the ARK Innovation ETF (ARKK) is down 50%.
Investors are concerned about the high valuations of both funds, as well as their exposure to risky assets. SMT has a large weighting to technology stocks, while ARKK invests in a variety of disruptive technologies, according to investment website Invezz.com.
“Investors are looking for more diversified and less risky alternatives to SMT and ARKK,” said Crispus Nyaga, financial analyst at Invezz. “There are a number of good UK-based ETFs that offer exposure to the UK stock market without the high valuations and risk of SMT and ARKK.”
“The recent underperformance of Scottish Mortgage and ARKK ETFs is a wake-up call for investors,”Crispus Nyaga, financial analyst at Invezz. “These funds have been darlings of the market for years, but they are now starting to show their true colors. Investors need to be careful about investing in funds that are heavily exposed to risky assets.”
Nyaga’s quote is a reminder that even the most popular funds can experience periods of underperformance. Investors should not blindly invest in funds without understanding the risks involved. They should also consider diversifying their portfolios to reduce their risk. A spokesperson for Invezz said it’s worth considering just using a demo account because “demo trading accounts offer the chance to practice stock trading without putting any of your own money at risk.”
One such ETF is the iShares Core FTSE 100 ETF (ISF), which tracks the performance of the FTSE 100 index. The FTSE 100 is a broad index of the largest 100 companies listed on the London Stock Exchange. It is a more diversified and less risky investment than SMT or ARKK.
Another alternative is the Vanguard FTSE All-Share ETF (VUSA), which tracks the performance of the FTSE All-Share index. The FTSE All-Share is a more comprehensive index of the UK stock market, and it also has a lower expense ratio than ISF.
What next?
UK investors are shunning Scottish Mortgage and ARKK ETFs, as the two funds have underperformed in recent months. This is reminiscent of the Truss market crash of 2023, when the UK stock market plummeted by 10% in a single day. There are a number of good UK-based ETFs that offer exposure to the UK stock market without the high valuations and risk of SMT and ARKK.
The Truss market crash was a major event in the UK financial markets, and it is still fresh in the minds of many investors. The recent underperformance of Scottish Mortgage and ARKK ETFs is likely to remind investors of the Truss crash, and it is likely to lead to further outflows from these funds.
The good news for UK investors is that there are a number of good alternatives to Scottish Mortgage and ARKK ETFs. The iShares Core FTSE 100 ETF and the Vanguard FTSE All-Share ETF are two good options for investors who are looking for a more diversified and less risky investment. Investors can also trade the UK stock market through a CFD broker if they want to speculate on the price of stocks without actually owning them.
Overall, the recent underperformance of Scottish Mortgage and ARKK ETFs is a reminder of the risks of investing in these funds. Investors should carefully consider their investment objectives and risk tolerance before investing in these funds.
