Ark Invest Diversifies Portfolio: Dumps $20M in Coinbase, Invests in OpenAI

Ark Invest, led by Cathie Wood, has offloaded $20.4 million worth of Coinbase shares while simultaneously adding OpenAI to its Venture Fund. The move is considered a strategic one to maintain diversification within its exchange-traded funds (ETFs).

According to The Block, Coinbase with a weighting of 9.7% occupies the second-largest holding in Ark’s ETFs, with market values of $696 million in ARKK and $169 million in ARKW. However, with Coinbase’s stock price rising and approaching all-time highs, Ark opted to rebalance its weightings.

Ark’s Consistent Dumping Strategy

Wood’s investment firm sold a total of 77,561 Coinbase shares across its Innovation ETF (ARKK) and Next Generation Internet ETF (ARKW). The dumping of over $20 million in Coinbase is consistent with Ark’s strategy of guaranteeing no individual holding occupies more than 10% of an ETF’s portfolio. This prevents overexposure to specific assets.

In February, Ark shed $16 million Coinbase shares amidst market volatility and the figure soared to $52 million in early March as both Coinbase and Robinhood were in the middle of a market rally. Market watchers are beginning to see a pattern to Ark’s strategy.

OpenAI’s Allure to Investors

Meanwhile, Ark’s Venture Fund, a private fund distinct from its ETFs, made its first investment in OpenAI on April 10. OpenAI, known for its groundbreaking advancements in artificial intelligence research, has produced influential models like GPT and DALLE, as well as consumer applications such as ChatGPT.

Ark Invest explained the decision in a letter to its clients. “OpenAI is at the forefront of a Cambrian explosion in artificial intelligence capability… and launching the first major consumer application of generative AI, ChatGPT, which is the fastest application in history to grow to 100 million active users,” Ark Invest wrote.

Wood herself stated that investors are exploring different options as some are now switching to Bitcoin from gold as a result of the spot ETF. However, the recent shift to Artificial Intelligence signals that Ark is taking a bullish outlook on the potential of AI technology to drive innovation across various industries. Analysts say AI technology holds prospects in the financial market and a good pick for investors looking to diversify.

Is AI Tech the New Rave?

Ark’s Venture Fund, established in 2022 has generated a 21% return by investing in companies throughout their lifecycle, from early-stage startups to mega-cap enterprises. Its success lies in the ability to identify promising investment opportunities across diverse sectors.

Interestingly, Ark’s previous investments include Anthropic, a rival of OpenAI, which is reportedly seeking buyers for its shares previously owned by the defunct crypto exchange FTX. The investment in AI technology might just be the new rave for crypto investors.