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Cathie Wood's Ark Invest has destroyed $14 billion in wealth over the past decade.
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A Morningstar analysis found that Ark Invest topped the list of wealth destroyers among other investment firms.
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“These funds have managed to lose value to shareholders, even during a generally bullish market,” Morningstar said.
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 the concentrated bet on highly speculative technology companies paid off big time thanks to low interest rates and a huge increase in risk appetite among private investors.
Arks flagship innovation ETF, ARKKrose nearly 150% in 2020, and that massive outperformance fueled a surge in inflows into the funds near its peak.
The company attracted nearly $30 billion in assets in 2020 and 2021, only to be decimated during the 2022 bear market when its flagship fund plummeted 67%.
The ARKK ETF destroyed $7.1 billion in wealth, while the 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 topped the list – and its losses were more than double those of the next company on the list.
What's notable is that Ark's massive wealth destruction occurred at a favorable time for the stock market.
“These funds have managed to lose value to shareholders, even during a generally bullish market,” said Morningstar analyst Amy Arnott.
The ARKK ETF has generated a total positive return of 121.8% since its inception in 2014, which is less than half of Nasdaq 100s 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 enormous destruction of wealth, ARK Invest is doing well as a company. The investment firm still has more than $13 billion in assets spread across its suite of ETFs, indicating that not all investors have abandoned Wood's investment strategy.
But in an investment world that is shifting to valuing profits over growth, it is unclear when Ark Invest's investment strategy will pay off for investors again.
The company's major holdings currently include Coin base, Tesla, RokuAnd Zoom videoall of which have had a rough start to 2024.
“The fund industry's biggest value destroyers illustrate that there is no guarantee of success, even in a generally favorable market environment. They also provide a valuable case study in what not to invest,” Arnott said.
This story was originally published in February 2024.
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