ETFs
Cathie Wood’s Ark Invest destroyed $14 billion in wealth: Morningstar
- Cathie Wood’s Ark Invest has destroyed $14 billion in wealth over the past decade.
- A Morningstar analysis found that Ark Invest topped the list of wealth destroyers among other investment companies.
- “These funds have managed to lose shareholder value, even in a generally bull market,” Morningstar said.
Thanks for recording!
Access your favorite topics in a personalized feed on the go. download the app
By clicking “Register”, you agree to our Terms of use And Privacy Policy. You can unsubscribe at any time by visiting our Preferences page or clicking “unsubscribe” at the bottom of the email.
Cathie Wood’s Ark Invest has destroyed an estimated $14.3 billion in wealth over the past decade, according to a recent study. Morningstar analysis.
Ark Invest was all the rage in 2020 and 2021, when its concentrated bets on highly speculative technology companies paid off thanks to low interest rates and surging risk appetite among retail investors.
The arch Flagship Innovation ETF, ARKKsoared nearly 150% in 2020, and this massive outperformance helped drive a surge in inflows into its funds right near its peak.
The firm attracted nearly $30 billion in assets in 2020 and 2021, which were then decimated during the 2022 bear market when its flagship fund plunged 67%.
The ARKK ETF destroyed $7.1 billion in wealth, while its healthcare-focused ARK Genomic ETF destroyed $4.2 billion in wealth, according to Morningstar.
Of all the fund families that have destroyed wealth over the past decade, Ark Invest tops the list – and its losses were more than double those of the next company on the list.
What is striking is that the massive destruction of Ark’s wealth occurred at a favorable time for the stock market.
“These funds have managed to lose shareholder value, even in a generally bullish market,” said Amy Arnott, an analyst at Morningstar.
The ARKK ETF has generated a positive total return of 121.8% since its inception in 2014, less than half of the Nasdaq 100 gain of 329.5% over the same period. In the meantime, The ARKK ETF is still down 71% from its all-time high.
Despite the massive destruction of wealth, ARK Invest, as a company, is doing very well. The investment firm still has more than $13 billion in assets across its ETF lineup, indicating that not all investors have abandoned Wood’s investment strategy.
But in an investment world that now prioritizes profits over growth, it’s unclear when Ark Invest’s investment strategy might once again pay off for investors.
The company’s main holdings currently include Coinbase, You’re here, RokuAnd Zoom videoall of whom had a difficult start to the year until 2024.
“The fund industry’s biggest value destroyers demonstrate that there is no guarantee of success, even in a generally favorable market environment. They also provide a valuable case study in how not to invest,” Arnott said.
This story was originally published in February 2024.