Get all your news in one place.
100’s of premium titles.
One app.
Start reading
The Street
The Street
Business
Dan Weil

Cathie Wood's Flagship Fund Keeps Falling

Asset manager Cathie Wood’s disruptive technology-stock picks are losing ground as inflation roars and bond yields soar.

That’s putting a major hurt on her flagship Ark Innovation ETF (ARKK), which has now dropped close to its pandemic low. 

The fund recently traded at $36.45, compared with its March 18, 2020, close at $34.69.

The fund’s biggest holdings are videoconferencing service Zoom Video Communications (ZM), electric-car giant Tesla (TSLA), video-streaming platform Roku (ROKU) and biotechnology company Crispr Therapeutics (CRSP).

Ark Innovation has slumped 61% year to date and has given up 77% from its February 2021 peak.

Mamma Cathie’s Flock

Wood has developed a cult-like following among retail investors, with her down-to-earth manner and frequent social-media appearances. They have taken to calling her Mamma Cathie.

And apparently many of Wood's investors aren’t too worried about Ark Innovation’s underperformance. The fund enjoyed a net inflow of $1.25 billion in the six months through June 10, according to VettaFi, an ETF research firm.

To be sure, there was an outflow of $24 million in the five days through June 10, and that was before the June 13 stock drop. But that outflow is a drop in the bucket -- 0.03% -- for a fund with $7.1 billion in assets.

Wood leaped to fame when her tech stocks soared in 2020. This sent Ark Innovation into the stratosphere, with a return of 153% that year. But it has since come back down to Earth.

Underperforming the S&P 500

As Ark Innovation and the other eight Wood funds have tumbled in recent months, she has defended herself by noting that she has a five-year investment horizon.

And the five-year track record of Ark Innovation could indeed give investors comfort until May 9. The fund’s five-year return beat that of the S&P 500 until then. But the five-year annualized return of Ark Innovation totaled 6.58% through June 13, behind the S&P 500’s 10.94% return.

“Most [fund managers] would probably collapse if they had the same performance, but Cathie and Ark have a strong following,” Bloomberg Intelligence ETF analyst Athanasios Psarofagis told his company’s news service.

Wood herself is clearly undaunted. She dropped hints again June 8 that she will soon start up a crossover fund. It would include both public and private investments.

"We're [the] closest to a venture capital fund in the public equity markets, and we're going to start a crossover fund,” Wood said in an interview with Bloomberg. She said she couldn’t say more for regulatory reasons.

Ark registered with the Securities and Exchange Commission for a fund named “Ark Venture” in February. The filing indicated the vehicle would focus on illiquid securities and would limit investor exits in periods of volatility.

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
One subscription that gives you access to news from hundreds of sites
Already a member? Sign in here
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.