Cathie Wood's flagship fund has reached an unenviable milestone years after she became a symbol of the pandemic-era investment mania. The ARK Innovation ETF (ticker: ARKK) recently recorded a 10-day consecutive decline, its longest losing streak in history. Over the past five years—spanning the late pandemic period, soaring interest rates, and the subsequent market rebound—ARKK has fallen more than 50%, while the Nasdaq 100 Index has gained 80% over the same period.

While returns can vary depending on the starting point, the fund's underperformance relative to major benchmarks remains significant in the broader post-pandemic cycle. Investors who bet on Wood's well-known "disruptive innovation" themes—such as electric vehicles, genomics, and fintech—have seen their investments falter as rising interest rates led to more selective appetite for speculative growth stocks.

At its peak in February 2021, during the height of the COVID-era investment boom, ARKK's assets swelled to approximately $28 billion. Today, they stand at around $6 billion, a drop of about 80% from the peak. Data shows the fund has declined 9% year-to-date, with net outflows of roughly $120 million so far this year.

These figures illustrate how quickly market leadership can rotate and how costly such shifts can be for latecomers. Investors who bought at the fund's inception and held through all volatility have seen solid overall returns. However, flow data tells a different story: most capital flowed in near the peak.

Dave Nadig, President and Director of Research at ETF.com, noted, "It is extremely rare for active managers to consistently 'get it right' over long periods. The mathematical reality of active management is that, on average, investors tend to underperform the market."

Although comparisons with tech benchmarks are common, ARKK's portfolio differs significantly from traditional sector indices. The fund has substantial exposure to areas like genomics and digital assets, which are not heavily weighted in the Nasdaq 100.

Wood has emphasized the importance of time horizon. Her flagship ARKK fund has delivered an annualized return of over 18% in the past three years, ranking in the top 8% of mid-cap growth funds tracked by Morningstar. While its five-year performance is near the bottom of its category, its 10-year annualized return exceeds 17%, placing it in the top 5%.

In a statement, Wood said, "Our process is not confined by style boxes, but the long-term results are clear: ARKK, ARKQ, and ARKW have ranked in the top 10% of their respective Morningstar categories over their full histories, with ARKQ and ARKW in the top 1%. Focusing only on shorter periods distorts the overall picture; annualized returns since inception remain the fairest measure in the industry."

Morningstar, however, assigns a negative rating to Wood's strategy, indicating the fund is likely to underperform its benchmark and most peers on a risk-adjusted basis. Although it has outperformed most peers over the past decade, its volatility has been roughly twice that of its category.

Data shows that since its inception, ARKK has attracted nearly $12 billion in net inflows. Yet, as of the end of January, the fund's assets totaled only about $6.2 billion, approximately $6 billion less than cumulative investor contributions over the years. This gap reflects capital flowing in during strong performance periods, only to be exposed to subsequent declines. By this measure, ARKK stands out in the roughly $14 trillion U.S. ETF market for the stark disconnect between investor inflows and remaining assets, highlighting significant wealth erosion.

Wood has consistently emphasized that ARKK is designed to complement, not replicate, broad market indices. Its role in a diversified portfolio depends on disciplined rebalancing—trimming positions after rallies and adding during declines. For investors who bought during booms and held through downturns, this strategy has worked as intended, albeit with accompanying volatility that may be unsettling.

Eric Balchunas, Senior ETF Analyst at Bloomberg Intelligence, commented, "Although some of her predictions haven't materialized, Cathie has been very transparent about what these ETFs invest in and has never wavered. The 'tourists' have left; the true believers remain—which may ultimately be a positive for her strategy."