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Over the past decade, Cathie Wood’s Ark Invest has obliterated $14 billion in wealth.
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Morningstar analysis revealed that Ark Invest leads the pack in wealth demolishers among other investment firms.
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“These funds succeeded in devaluing shareholders’ worth even in a generally bullish market,” commented Morningstar.
A recent Morningstar analysis estimates that Cathie Wood’s Ark Invest has obliterated around $14.3 billion in wealth over the past decade.
Ark Invest gained popularity in 2020 and 2021, when its heavy bets on highly speculative tech companies yielded significant returns due to low interest rates and a surge in risk appetite among retail investors.
Ark’s primary innovation ETF, ARKK, skyrocketed nearly 150% in 2020, and this massive overperformance triggered an influx into its funds at its peak.
The firm drew nearly $30 billion in assets in 2020 and 2021, which were then wiped out during the 2022 bear market when its flagship fund plummeted 67%.
According to Morningstar, the ARKK ETF obliterated $7.1 billion in wealth, while its healthcare-focused ARK Genomic ETF wiped out $4.2 billion in wealth.
Among all fund families that have obliterated wealth over the past decade, Ark Invest leads the pack — its losses were more than double the next firm on the list.
What’s remarkable is that Ark’s massive wealth obliteration happened during a favorable period for the stock market.
“These funds succeeded in devaluing shareholders’ worth even in a generally bullish market,” stated Morningstar analyst Amy Arnott.
Since its inception in 2014, the ARKK ETF has generated a total positive return of 121.8%, which is less than half of the Nasdaq 100’s gain of 329.5% over the same period. Meanwhile, the ARKK ETF is still down 71% from its record high.
Despite the massive wealth obliteration, ARK Invest as a business is doing fine. The investment firm still manages more than $13 billion in assets across its ETF suite, indicating that not all investors have given up on Wood’s investment strategy.
However, in an investment world that is shifting towards valuing profits over growth, it’s uncertain when Ark Invest’s investment strategy might once again benefit investors.
The firm’s top holdings currently consist of Coinbase, Tesla, Roku, and Zoom Video, all of which had a rough start to 2024.
“The biggest value destroyers in the fund industry demonstrate that there’s no guarantee of success, even during a generally favorable market environment. They also offer a valuable case study in how not to invest,” Arnott commented.
This story was first published in February 2024.
Read the original article on Business Insider
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