Cathie Wood, the investor who gained fame during the pandemic-era trading frenzy, is now confronting a significant milestone for the wrong reasons. Her flagship ARK Innovation ETF (ARKK) recently recorded its longest-ever losing streak, closing lower for ten consecutive trading days earlier this month. Over the past five years—a period spanning the late stages of the pandemic, a rising interest rate environment, and subsequent market rebounds—ARKK has declined by more than 50%. In contrast, the Nasdaq 100 Index rose approximately 80% over the same period, highlighting a stark divergence in performance.
This underperformance becomes even more pronounced when viewed across the broader post-pandemic cycle. Investors who followed Wood’s “disruptive innovation” strategy, betting on sectors such as electric vehicles, genomics, and fintech, have watched these positions struggle as interest rates climbed and the market grew increasingly selective toward high-valuation growth stocks.
ARKK’s assets under management have contracted sharply as a result. At its peak in February 2021, amid massive stimulus and abundant liquidity, the fund held around $28 billion. Today, that figure has dwindled to roughly $6 billion—a decline of nearly 80% from the high. Year-to-date, ARKK has fallen about 9% and experienced net outflows of approximately $120 million. These figures underscore how quickly market sentiment can shift and the cost borne by investors who entered at elevated valuations.
While long-term holders who invested from the fund’s inception have seen reasonable overall returns, flow data reveal a different reality: a large portion of capital entered during the peak of the rally, when valuations were highest. Dave Nadig, President and Director of Research at ETF.com, noted, “It is extremely rare for active managers to consistently time the market correctly over extended periods. The mathematical outcome of active management is often that the average investor underperforms the market.”
Though ARKK is frequently compared to technology indices, its portfolio differs significantly from traditional tech benchmarks. The fund maintains substantial exposure to areas like genomics and digital assets, which carry minimal weight in the Nasdaq 100. Wood has repeatedly emphasized the importance of a long-term perspective. Data show that over the past three years, ARKK’s annualized return exceeded 18%, placing it in the top 8% of mid-cap growth funds tracked by Morningstar. Over a five-year horizon, however, its performance ranks near the bottom of its category. On a 10-year basis, ARKK’s annualized return remains above 17%, placing it in the top 5%.
In a statement, Wood defended her investment process, noting that it is not constrained by traditional style categories. She pointed out that over their full histories, ARKK, ARKQ, and ARKW have all ranked in the top decile of their Morningstar categories, with ARKQ and ARKW among the very best. “Selecting only short time periods for comparison distorts the full picture,” she argued. “Annualized returns since inception are the fairest industry benchmark.”
Despite this long-term track record, Morningstar has assigned a negative rating to Wood’s strategy, citing concerns that the fund may underperform its benchmark and peers on a risk-adjusted basis. Although ARKK has outperformed many similar products over the past decade, its volatility has been roughly twice as high. During the bull market fueled by loose monetary policy and fiscal stimulus, Wood’s concentrated bets delivered impressive returns. But as monetary policy tightened and market leadership narrowed to a handful of mega-cap stocks, those same holdings began to drag on performance.
ARKK remains heavily concentrated in companies reliant on long-term profit expectations, making it particularly sensitive to rising financing costs and amplifying swings in net asset value. Top holding Tesla has declined year-to-date, while other key positions such as Tempus AI and Roku have also faced pressure.
Looking solely at price movement does not fully capture investors’ actual experience. Since its inception, ARKK has attracted nearly $12 billion in net inflows, yet by late January, its assets stood at only about $6.2 billion. This implies that roughly $6 billion of investor capital has been eroded by market volatility. By this measure, ARKK stands out as one of the U.S. ETF market’s most extreme examples of divergence between cumulative inflows and remaining assets—a clear sign of significant wealth destruction.
Wood has long emphasized that ARKK is not designed to replicate broad market indices but to serve as a complementary tool within a portfolio, provided investors practice disciplined rebalancing—trimming positions during rallies and adding during pullbacks. For those who bought at the peak and held on, this mechanism has functioned as intended, though it has come with far greater volatility than most anticipated.
As Eric Balchunas observed, “While some of her predictions haven’t materialized, Wood has always been very transparent about what the ETF will invest in and has never deviated from that direction. The ‘tourist’ investors have left, and those who remain are true believers. For a strategy like hers, that may not be a bad thing.”