Smart money, typically indicative of institutional investors, politicians, and insiders, can signal potential price movements in equities and exchange-traded funds (ETFs). Tracking these investments can reveal important themes and sectors. Institutions are better positioned to analyze and act on investments compared to retail investors. The focus will be on ETFs with notable inflows from this smart money. One highlighted ETF is the Ark Innovation ETF (ARKK), led by Cathie Wood; however, it has faced significant declines after prior soaring gains.
Smart money isn't always smart, and following it blindly is unlikely to pay off. However, when you have institutional investors, politicians, and insiders all pile into an equity or an exchange-traded fund, there's likely a reason behind it.
Institutions have far more resources than individual retail investors doing research on their own. So, when they decide to bet big on an ETF, they have a good rationale for it and are often not looking for a quick pop.
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