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Cathie Wood’s Ark Invest has destroyed $14 billion in assets over the last decade.
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A Morningstar analysis found Ark Invest tops the list of wealth destroyers among other investment companies.
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“These funds have managed to lose value to shareholders even in a generally bullish market,” Morningstar said.
According to a recent Morningstar analysis, Cathie Wood’s Ark Invest has destroyed an estimated $14.3 billion in assets over the past decade.
Ark Invest was all the rage in 2020 and 2021 as its concentrated bets on highly speculative tech companies paid off big thanks to low interest rates and booming risk appetite among retail investors.
Ark’s flagship innovation ETF, ARKK, rose nearly 150% in 2020, and this huge outperformance helped fuel inflows into its funds near their peak.
The company accumulated nearly $30 billion in assets in 2020 and 2021, which were then decimated during the 2022 bear market when its flagship fund plunged 67%.
According to Morningstar, the ARKK ETF destroyed $7.1 billion in assets, while its healthcare-focused ARK Genomic ETF destroyed $4.2 billion in assets.
Of all the fund families that have shed wealth over the last decade, Ark Invest topped the list – and its losses were more than double those of the next company on the list.
What is striking is that Ark’s massive wealth destruction occurred at a favorable time for the stock market.
“These funds could lose value to shareholders even in a generally bullish market,” said Morningstar analyst Amy Arnott.
The ARKK ETF has generated a positive total return of 121.8% since its launch in 2014, which is less than half of the Nasdaq 100’s gain of 329.5% over the same period. Meanwhile, the ARKK ETF is still 71% below its record high.
Despite the massive asset destruction, ARK Invest is doing well as a company. The investment company still has more than $13 billion in assets in its ETF lineup, suggesting that not all investors have abandoned Wood’s investment strategy.
But in an investment world where profits are becoming more important than growth, it is unclear when Ark Invest’s investment strategy might pay off again for investors.
The company’s top holdings currently include Coinbase, Tesla, Roku and Zoom Video, all of which have had a difficult start to 2024.
“The biggest value destroyers in the fund industry show 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,” said Arnott.
This story was originally published in February 2024.
Read the original article on Business Insider