Cathie Wood’s ARK Invest’s risky bets on rising tech firms have wiped out an estimated $1.3 billion in shareholder capital over the past ten years.
The significant losses in ARK’s investment offerings so far this year are not taken into account by these losses either.
As per the reports, two of ARK’s actively managed vehicles, the ARK Genomic Revolution ETF (ARKG) and the ARK Fintech Innovation ETF, were principally responsible for the majority of those losses over the previous year (ARKF).
The ARK Genomic Revolution fund manages approximately $2.4 billion in assets, and is down about 34% in 2021, despite the fact that the stock market had a spectacular year, with the benchmark S&P 500 returning 28.7% and the tech-heavy Nasdaq100 returning 27.5%.
With $187 million in net assets, the ARK Fintech Innovation ETF has lost nearly 18% of its value since last year. The funds have lost 49% and 62%, respectively, so far in 2022.
The investment management company Cathie Woods ARK uses an actively managed equity approach with funds targeted on disruptive innovation across five investing themes: artificial intelligence, autonomous cars, fintech, DNA sequencing and robotics, and 3D printing.
Since the Federal Reserve ended its easy-money policy late last year, which had boosted investor enthusiasm for speculative, high-flying market segments in an effort to contain inflation, business in these sectors has been particularly impacted.
The price of ARK’s flagship exchange-traded fund, the ARK Innovation ETF (ARKK), which is frequently used as a proxy for speculative tech equities in the United States, has decreased more than 60% this year. The net worth of ARKK is approximately $8 billion.
ARKK rose to prominence following a startling 150% pandemic return in 2020 that contributed to it bringing in an expected $20.6 billion in inflows in 2021.
Wood this year guaranteed ARKK ETF investors a 50% compound annual rate of return for the following five years.
Back in April, Wood stated in an interview that the decrease in ARKK of 36% year-to-date implied return expectations had risen from 15% to 50% yearly. As of Wednesday’s end, ARKK has lost another 44% since then, totaling a loss of approximately 64% for the year.
People should be aware that the type of returns we saw in 2020 when several of the ARKK funds had triple-digit returns are extremely unlikely to be duplicated in any subsequent year, regardless of whether or not these stocks can reach Cathie’s expectations.
Cathie Wood has been establishing herself as an investor for more than 40 years. Wood has always had her own opinions, even when they differed from those of the majority, since the beginning of her career. Despite the conflicts, Wood’s investments in firms like Tesla have turned out to be beneficial.
Wood established ARK Invest in 2014; it is an asset management company that oversees $14 billion in assets. Although her investing strategy has generated some controversy, it has grown in favor over time.
Her interest in and aptitude for predicting stock trends are a result of Wood’s work as an economist. Wood launched ARK invest after leaving her position at the investment firm AllianceBernstein.
It’s hardly surprising that ARK invest’s ETFs feature businesses that provide cutting-edge technology and solutions given Wood’s expressed support for Tesla. In addition to Tesla, Zoom and Roku are among ARK invest’s top holdings.
Due to a lack of outside funding, ARK investment’s start was troublesome. According to Wood, a portion of her wealth was transferred into the business every two weeks. Employees were forced to work from their laptops because the company lacked an office.
For three years before outside funding, Wood supported ARK’s investment on a personal basis.