Cathie Wood's investment firm, Ark Invest, has reportedly lost an estimated $14.3 billion in wealth over the past decade, making it the top wealth destroyer among other investment companies, according to a recent analysis by Morningstar. This is despite the fact that Ark Invest gained significant attention and popularity in 2020 and 2021 for its successful bets on speculative technology companies, driven by low interest rates and increased risk appetite among retail investors.
Ark Invest's flagship innovation ETF, ARKK, saw a remarkable surge of nearly 150% in 2020, attracting approximately $30 billion in assets. However, during the 2022 bear market, the fund plummeted by 67%, resulting in significant wealth destruction. The ARKK ETF alone accounted for $7.1 billion in losses, while the healthcare-focused ARK Genomic ETF contributed $4.2 billion in losses.
What is noteworthy is that these losses occurred during a generally bullish market, raising concerns about Ark Invest's investment strategy. Morningstar analyst Amy Arnott highlighted that the funds managed to lose value for shareholders even during favorable market conditions.
Although Ark Invest's wealth destruction is substantial, the firm itself remains resilient, with over $13 billion in assets across its suite of ETFs. This indicates that not all investors have abandoned Cathie Wood's investment approach. However, as the investment landscape shifts towards valuing profits over growth, it remains uncertain when Ark Invest's strategy will prove successful again.
Currently, Ark Invest's top holdings include Coinbase, Tesla, Roku, and Zoom Video, all of which have experienced a challenging start to 2024. It is worth noting that these companies have faced their own share of difficulties and setbacks.
Overall, Ark Invest's performance serves as a cautionary tale and a reminder that success in the investment industry is not guaranteed, even during favorable market conditions. Morningstar's Arnott emphasizes the importance of using Ark Invest's example as a valuable case study in how not to invest, highlighting the need for careful evaluation and consideration of investment strategies.