Catherine Wood, chief executive officer and chief investment officer of Ark Invest.
Patrick T. Fallon/Getty Images
- Cathie Wood’s expectation for a 20% gain in her Ark Invest flagship fund didn’t pan out this year.
- Ark Invest’s Disruptive Innovation ETF instead has fallen more than 20% in 2021, representing its worst return since inception.
- Wood now expects the growth-oriented ETF to deliver a compounded annual growth rate of up to 40% over the next 5 years.
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It’s been a difficult year for investors in Ark Invest’s flagship Disruptive Innovation ETF, with the fund on track for its worst year of performance since launching in 2014.
That’s after the ETF delivered sky-high returns of 150% in 2020, helping Ark Invest amass more than $17 billion in assets under management in its flagship fund. The ETF is down 21% in 2021, while the S&P 500 is up about 30% year-to-date.
Ark Invest’s poor returns in 2021 were likely a surprise to Cathie Wood, who forecasted a five-year compounded annual growth rate of 20% in December of 2020. She now expects even higher returns looking forward, with a recent blog post outlining her view that the fund could deliver a five-year compounded annual growth rate of up to 40%.
But Wood’s prediction for a 20% gain in 2021 looked to be correct earlier this year, with the fund up 25% at its peak in February. Since then, a downturn in work-from-home stocks and unprofitable technology names dragged down its performance considerably.
The stocks that hit Ark Invest’s performance the most include Teladoc and Zoom Video, which are both down about 50% this year and lowered the fund by 550 and 386 basis points, respectively, according to data from Koyfin.
Those losses far outweighed Ark Invest’s top performing holding, Tesla, which is up more than 56% year-to-date and boosted the fund by 286 basis points.
And it’s not just Ark Invest’s flagship ETF that has had a rough year, with five out of Ark’s six active ETF’s delivering negative returns year-to-date. The Ark Genomic Revolution ETF is the worst performing fund, down about 33% year-to-date, while the Ark Autonomous Technology and Robotics ETF is the best performing fund, up about 3%.