With every new year comes a clean slate. For Cathie Wood’s Ark Invest, that doesn’t seem to be the case.
The firm’s beaten-down Ark Innovation Fund (ARKK) has hit a new low in 2022 — already. After shedding 7% in Wednesday’s sell-off, the fund is down 9% this week so far and 45% from its peak in February 2021, with the decline marking its worst drawdown since inception in 2014.
A rout in growth-oriented stocks that has battered ARKK was made worse on Wednesday as investors mulled the likelihood of sooner-than-expected rate hikes after minutes from the Federal Open Market Committee’s (FOMC) December meeting reflected concerns from policymakers about worsening inflation, signaling more imminent intervention by the central bank.
Losses in Ark’s beleaguered exchange-traded fund come amid the renewed pressures in technology stocks that sent the Nasdaq tumbling 3.1% and the S&P 500 down 1.9% in Wednesday’s trading session. The benchmark 10-year Treasury yield topped 1.7% to yield its highest since April, deepening the downturn in high-growth stocks.
Bespoke Investment Group pointed out that ARKK’s 2022 declines place it only 6.66 percentage points above the S&P 500 since the ETF’s pre-COVID high and 17.9 percentage points below the Nasdaq 100 (QQQ) as of Wednesday. At its February 2021 peak, the fund was significantly outperforming both benchmarks — beating SPY by 143% since its pre-COVID peak and the more tech-heavy QQQ by 117%.
Wood, whose prescient stock picks made her a star on Wall Street after ARKK returned 150% in 2020, promised investors just one month ago that her strategy could deliver a 40% compound annual rate of return during the next five years — a projection she later updated to a lower but still ambitious 30%-40% after some rebuke.
All 20 of ARKK’s top holdings were in the red at Wednesday’s close. Losses were led by Roku (ROKU), down 11.72%; UiPath Inc. (PATH) down 10.33%; and Intellia Therapeutics (NTLA), down 8.97%. Of the 20 holdings, all except Tesla (TSLA) are down 20% or more from recent highs.
All 20 of Ark Innovation’s top holdings except Tesla are down 20% or more from recent highs.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc