Cathie Wood’s commitment to “disruptive innovation” clearly knows no bounds. The fund manager continues to buy up rapidly sinking tech operators even as her flagship exchange-traded fund, ARKK Innovation ETF (NYSEARCA:ARKK), sees losses over 60% this year. 2022 is looking to be Wood’s worst year ever as the tech and growth stock slump pushes the ARKK ETF further into the red.
Most of the country is figuring out ways to cut back on spending, and many investors are reallocating funds toward safer value stocks and fixed-income picks. But Wood has calmly and collectedly bolstered her portfolio with some of 2022’s biggest losers like Roku (NASDAQ:ROKU), Coinbase (NASDAQ:COIN) and Zoom (NASDAQ:ZM).
Roku, which is ARKK’s third-largest holding by market capitalization, is down more than 65% this year. Wood bought more than 135,000 shares of the plummeting streaming service just last week.
It’s a similar story for cryptocurrency exchange Coinbase, ARKK’s 10th-largest holding. COIN stock is down nearly 80% this year as a tragic victim of the crypto crash. Yet, Wood continues to believe in the flailing stock, buying more than 300,000 shares in just the past month.
Wood is holding onto her innovation investment strategy for dear life even as the ARKK ETF approaches pandemic lows. Despite ARK funds taking on water, however, Wood continues to attract new investments.
ARKK ETF Flounders as Cathie Wood Underplays Inflation Impact
Even as the U.S. entered a bear market to start the week, Wood has only expressed confidence in the economy going forward. In an interview with Goldman Sachs, she theorized inflation is already past its peak.
Even after Friday’s startling Consumer Price Index report, Wood views inflation as a passing issue:
“I do think we are on the other side of the inflation problem … I think the rates market is telling us that inflation will eventually come down to levels consistent with positive real growth, and have been surprised that more investors don’t seem more reassured by this.”
Despite ARKK’s unruly performance this year, Wood’s funds continues to draw in investors, receiving $167 million of inflow this year.
Interestingly, the Tuttle Capital Short Innovation ETF (NYSEARCA:SARK), the fund shorting Wood’s ARKK, has had a gangbuster year. SARK is up an unbelievable 89% this year, simply by betting against Wood’s flagship fund.
Whether Wood’s growth investments will result in the 40% compound annual rate of return she once hinted at remains to be seen. Currently, the ARKK ETF is in the red 60% this year, while the S&P 500 has lost 21% over the same period.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
