Cracks are starting to form in the resiliency of Ark Invest’s retail-driven shareholder base.Cathie Wood’s flagship fund has suffered its largest monthly withdrawal in nearly a year at $820 million.Ark Invest’s main ETF has seen lackluster performance since its February 2021 peak, falling 75%. Loading Something is loading.
Cracks are beginning to form in the resiliency of Ark Invest’s retail-driven shareholder base, as its flagship fund suffers its biggest outflow in nearly a year.
The Ark Invest Disruptive Innovation ETF saw outflows of $820 million in August, just shy of its September 2021 outflow of $939 million, according to data from VettaFi.
The about-face could mark the beginning of a reversal of a more than year-long trend in which Ark saw positive inflows from its investors despite flagging performance. Year-to-date, the flagship ETF has seen about $1 billion in inflows.
Ark Invest CEO Cathie Wood has chalked up the resiliency of her investor base to Ark’s practice of being transparent with its investment research and long-term views.
“Ark is net inflowing this year, and I think it’s because we give away our research, and our research is unique. It’s original research. And we’re trying to help people understand how the world is going to change during the next five to 10 years, and how rapidly it’s going to change,” she said in a video update earlier this year.
But now investors may be growing tired of the consistent underperformance in the once-hot thematic ETF. Since its peak in February 2021, Ark’s flagship fund has lost 75%, as a series of aggressive interest rate hikes from the Federal Reserve and elevated inflation concerns put a big dent in longer-duration stocks that are not yet profitable.
Ark’s flagship fund has lost 56% year-to-date, more than double the Nasdaq 100’s decline of 25% over the same time period. Of the 36 holdings in Ark’s flagship ETF, only two have generated a positive return over the past year: Tesla and Signify Health, according to data from Koyfin.
Meanwhile, a handful of stocks in Ark’s portfolio are down upwards of 90% over the past year, including Berkeley Lights and Invitae Corporation, and Ark isn’t afraid of buying the dip in its losing stocks.
Adding to Ark’s underperformance has been its steadfast commitment to increasing its exposure to fledging tech stocks that saw a boom during the peak work-from-home era, with Zoom Video and Roku being its two largest holdings. Meanwhile, the fund has been building sizable positions in unproven biotech firms Ginkgo Bioworks and Beam Therapeutics, among others.
But despite the recent outflows and poor performance, Ark Invest still commands a sizable investment base relative to other thematic ETF providers. Ark’s flagship fund has $8 billion in assets under management, a considerable amount despite its sizable fall from a peak of about $28 billion in early 2021.
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