A 1000 investment in Cathie Woods flagship fund known as a wealth destroyer at the beginning of 2024 would have yielded
Cathie Wood made a name for herself in 2020 when her flagship exchange-traded fund (ETF), the ARK Innovation (ARKK), focused on technology, achieved impressive returns of 149%. However, her long-term performance has been inconsistent, leading Morningstar to label her the third-greatest ‘wealth destroyer’.
In May, Finbold calculated that a $1,000 investment made near ARKK’s peaks in 2021 would have depreciated by a shocking 61.9%, resulting in a value of less than $300.
Despite the volatility and downturns, the question remains whether investing in the ARK Innovation ETF at the start of 2024 would have been profitable.
The performance of ARKK in the first half of 2024 has been marked by significant volatility, resulting in a substantial decline. The fund started the year at $51.8 and currently stands at $43.37, representing a year-to-date (YTD) decline of 16.27%.
If a $1,000 investment was made on January 2, 2024, it would have bought 19.3 shares. By June 21, these shares would be worth $837.26, indicating a loss of nearly $163.
The underperformance of ARKK can be attributed to its largest holdings. Tesla Motors, the biggest holding, has been struggling for almost a year, experiencing what is commonly referred to as the EV winter. It was even the worst-performing stock in the S&P 500 at one point and remains down 26.91% YTD.
The third-largest holding, Roku Inc., has performed even worse, with a stock market decline of 39.70% since the beginning of the year.
On the other hand, the second-largest holding, Coinbase, benefited from the cryptocurrency market rally and has risen by 49.82% since January 2.
Interestingly, ARKK’s focus on ‘disruptive’ technologies does not include many artificial intelligence (AI) companies among its top holdings. Only Palantir is present on the list, and while it has performed well in 2024, it is not the biggest AI gainer of the year.
It is important to note that this article does not provide investment advice, and investing carries risks.
