Cathie Wood’s ETFs lost investors more than $1 billion before this year’s wipeout

Bold bets on high-flying technology stocks from Cathie Wood’s ARK Invest have destroyed an estimated $1.3 billion in shareholder wealth over the past decade, a Morningstar analysis published this week found.

And these losses don’t take into account the sharp declines seen across ARK’s suite of investment offerings so far this year.

According to Morningstar, the bulk of these losses came primarily from two of ARK’s actively managed vehicles last year: the ARK Genomic Revolution ETF (ARKG) and ARK Fintech Innovation ETF (ARKF).

The ARK Genomic Revolution fund – with roughly $2.4 billion in assets under management – shed roughly 34% in 2021, per Yahoo Finance data, even during a blowout year for the stock market that saw the benchmark S&P 500 return 28.7% and the technology-heavy Nasdaq 100 churned out 27.5%.

The ARK Fintech Innovation ETF, with $817 million in net assets, lost about 18% last year.

Year-to-date in 2022, the funds are down 49% and 62%, respectively — losses that are not reflected in Morningstar’s data.

ARK’S ETFs came in fifth place among Morningstar’s list of top 10 wealth-destroying funds compiled by portfolio strategist Amy C. Arnott, and ranked just below investment vehicles from Credit Suisse, ALPS, Kraneshares, and Barclays.

“In most cases, the fortunes of the worst-performing fund families are a product of their investment focus,” Arnott said in the analysis, noting most firms seeing the largest losses for clients had fund lineups focused on categories like commodities, natural resources, and emerging markets.

In the case of Cathie Wood’s ARK, the investment management firm employs an actively-managed equity strategy with funds focused on disruptive innovation over five investment themes — artificial intelligence, autonomous vehicles, fintech, DNA sequencing, and robotics and 3D printing.

Companies in these industries have been hit particularly hard since late last year as the Federal Reserve moved away from easy-money policies that fueled investor enthusiasm for speculative, high-flying pockets of the market in an effort to tame inflation.

LISBON, PORTUGAL - 2022/11/02: CEO & Chief Investment Officer of ARK Invest, Cathie Wood, addresses the audience at Altice Arena Centre Stage during the second day of the Web Summit 2022 in Lisbon. The biggest technology conference in the world is back in Lisbon. The conference will discuss new technological trends for four days and how they will influence people's lives. 70,000 people expected to participate in the event. (Photo by Hugo Amaral/SOPA Images/LightRocket via Getty Images)

LISBON, PORTUGAL – ARK Invest CEO Cathie Wood addresses the audience at the Web Summit 2022 in Lisbon. (Photo by Hugo Amaral/SOPA Images/LightRocket via Getty Images)

ARK’s flagship exchange-traded fund, the ARK Innovation ETF (ARKK) — often seen as a proxy for U.S. speculative tech stocks — has dropped more than 60% this year. ARKK has about $8 billion in net assets. ARKK gained popularity after a stunning pandemic return of 150% in 2020 that helped it attract $20.6 billion in estimated inflows in 2021, according to Morningstar.

Even amid this year’s decline, Bloomberg data shows ARKK has attracted roughly $1.5 billion in inflows year to date.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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Read More:Cathie Wood’s ETFs lost investors more than $1 billion before this year’s wipeout

2022-12-08 19:35:14

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