Why ARK is Buying Alibaba’s Rivals

There are reasons to be wary of the ARK Innovation ETF doubling down on the Chinese mega tech names.

Kate Lin, CAIA 21.05.2021
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Thinking

While global techs are faltering, ARK Invest’s founder Cathie Wood says, in the flagship ARK Innovation ETF (ARKK), she has been loading up Chinese tech names, such as JD.com (JD), Tencent (700) and Baidu (BIDU), the most known rivals to Alibaba (BABA). Wood is betting on them taking a large market share from Jack Ma’s e-commerce empire.

It wouldn’t be surprising that these potential global leaders of tomorrow would draw interests from global growth or innovation-theme managers. But also because these names happen to be large in scale and continue growing, the decision in gaining such large-cap exposure is more than reflecting Wood’s investing convictions. Robby Greengold, a Chicago-based strategist of Morningstar, sees snares in ARKK’s portfolio risks and constraints.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Alibaba Group Holding Ltd ADR168.00 USD0.73Rating
Baidu Inc ADR163.63 USD0.57Rating
JD.com Inc ADR81.42 USD0.48Rating
Tencent Holdings Ltd495.60 HKD2.57Rating

About Author

Kate Lin, CAIA

Kate Lin, CAIA  is a Data Journalist for Morningstar Asia, and is based in Hong Kong

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