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Cathie Wood's Flagship Fund Struggles to Match Market

The Ark Innovation ETF has eased 0.4% over the past five days, while the S&P 500 index has climbed 3%.
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Cathie Wood’s ARK Investment Management is missing out on the year-end stock rally, as the investment darling’s disruptive technology companies lag the overall market.

The flagship Ark Innovation ETF  (ARKK) - Get ARK Innovation ETF Report has eased 0.4% over the past five days, while the S&P 500 index has climbed 3%. Over the past six months, Ark Innovation has lost 22%, compared to a 12% ascent for the S&P 500.

Ark Innovation’s second biggest holding, streaming platform Roku  (ROKU) - Get Roku, Inc. Class A Report, has sunk 45% over the past six months. No. 3 Teladoc Health  (TDOC) - Get Teladoc Health, Inc. Report, the telecom healthcare company, has slumped 43%; No. 4 Zoom Video Communications  (ZM) - Get Zoom Video Communications, Inc. Class A Report, the video-services provider, has tanked 51%; and No. 6 Spotify Technologies  (SPOT) - Get Spotify Technology SA Report, the audio platform, has shed 11%.

To be sure, not everything has gone south for Wood. Ark Innovation’s biggest holding, electric car maker Tesla  (TSLA) - Get Tesla Inc Report, has soared 62% in the past six months.

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Last week, she said her stocks are in “deep value territory,” not in a bubble, and should generate hefty returns over the next five years. ARK Innovation has soared 92% over the past two years.

“After correcting for nearly 11 months, innovation stocks seem to have entered deep value territory, their valuations a fraction of peak levels,” Wood wrote in a blog.

“Historically and according to our research … concentration of our portfolios during corrections has led to significant, absolute performance and relative outperformance as the market rebounds.

“According to our current estimates, our more concentrated flagship strategy today could deliver a 40% compound annual rate of return during the next five years. Only one other time in Ark’s history, at the end of 2018, has the five-year return projection been that high."

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