Cathie Wood’s Ark Invest has been making headlines for all the wrong reasons, as a recent Morningstar analysis revealed that the investment firm has destroyed an estimated $14.3 billion in wealth over the past decade. This staggering amount of wealth destruction has put Ark Invest at the top of the list of wealth destroyers among other investment companies.
Ark Invest gained significant popularity in 2020 and 2021, with its concentrated bets on highly speculative technology companies paying off handsomely thanks to low interest rates and a surge in risk appetite among retail investors. The firm’s flagship innovation ETF, ARKK, saw a massive 150% surge in 2020, attracting nearly $30 billion in assets during its peak.
However, the tides turned in 2022 when the bear market hit, causing Ark Invest’s flagship fund to plummet by 67%. The ARKK ETF alone destroyed $7.1 billion in wealth, while the healthcare-focused ARK Genomic ETF wiped out $4.2 billion, according to Morningstar.
Despite the massive wealth destruction, Ark Invest still manages over $13 billion in assets across its suite of ETFs, indicating that some investors are still holding onto hope for Cathie Wood’s investment strategy. However, with the investment world shifting towards valuing profits over growth, it remains uncertain when Ark Invest’s strategy might pay off for investors again.
As Morningstar analyst Amy Arnott pointed out, the case of Ark Invest serves as a valuable lesson in the unpredictability of the market and the importance of a diversified investment strategy. With Ark’s top holdings, including Coinbase, Tesla, Roku, and Zoom Video, facing challenges in 2024, investors are left wondering if the firm can turn the tide and regain the trust of its shareholders.