Ark Invest’s Crypto-Powered ESG Fund Emerges as Top Performer of 2023
Ark Investment Management’s best-performing ESG fund of 2023 had made a bold bet on cryptocurrencies.
The $2.4 billion Nikko AM Ark Positive Change Innovation Fund (ticker NIPCIPJ LX) achieved an outstanding return of 68% last year, surpassing the gains of the S&P 500 index.
What makes the fund stand out is its substantial bet on cryptocurrencies, with its largest holding being Coinbase Global Inc., which constitutes nearly 10% of the fund’s portfolio.
The success of the Nikko-Ark fund is remarkable considering the challenges faced by many ESG funds focused on traditional clean-tech assets such as wind and solar, which experienced setbacks due to disruptions caused by higher interest rates.
Notably, ESG funds that ventured into other areas of technology enjoyed greater success.
Coinciding with a 21% decline in the S&P Global Clean Energy Index, the market value of Coinbase skyrocketed almost fivefold last year.
The surge in the largest US cryptocurrency exchange contributed significantly to the fund’s impressive performance.
The positive momentum for cryptocurrencies continued into 2024 as the US Securities and Exchange Commission finally approved several Bitcoin exchange-traded funds, sparking enthusiasm among crypto enthusiasts.
However, subsequent market fluctuations have led some analysts to attribute the decline in Bitcoin’s value to the classic “buy the rumor, sell the fact” phenomenon.
Thomas Hartmann-Boyce, a portfolio manager at Ark, believes that the SEC approval provides ample room for Coinbase shares to continue their upward trajectory.
As the leading custodian for underlying Bitcoin (BTC) assets, Coinbase holds a prominent position in the digital assets category, making it the fund’s highest conviction investment.
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