Cathie Wood’s exchange-traded funds (ETFs) may have hit the skids, but she has crushed it on bitcoin.
The Ark Investment Management CEO bought $100,000 worth of bitcoin when it traded at $250, she told The What Bitcoin Did Podcast. As of Oct. 24 that would be worth $7.7 million.
Wood bought on the influence of research by her mentor Arthur Laffer, a former economics professor and key economic official in the Reagan administration.
Turning to Wood’s Ark ETFs, their performance hasn’t matched that of her bitcoin investment.
The funds have tumbled this year, as their technology stock holdings suffered from weak earnings. Wood has defended herself by noting that she has a five-year investment horizon.
And the five-year track record of her flagship Ark Innovation ETF (ARKK) could indeed give investors comfort up to May 9. The fund’s five-year return beat that of the S&P 500 until then. But the five-year annualized return of Ark Innovation totaled only 2.14% through Oct. 21, far behind the S&P 500’s 9.75% return.
Wood Misses Target
The fund’s performance also falls far short of Wood’s goal for annualized returns of 15% over five-year periods.
Ark Innovation’s share price has tumbled 63% so far this year, and it’s down 78% from its February 2021 peak.
The $7.1 billion fund’s underperformance may finally be starting to push investors away. Ark Innovation suffered a net outflow of $450 million in the three months through Oct. 21, according to VettaFi, an ETF research firm. But it has still registered an inflow of $591 million over the last six months.
You might wonder why so many investors have stuck with Wood, despite her mediocre returns. The fact that she had one spectacular year certainly helps. Ark Innovation ETF skyrocketed 153% in 2020.
Also, Wood has become something of a rock star in the investment world, appearing frequently in the media. She is clearly intelligent and articulate, explaining financial concepts in ways that novice investors can understand.
Criticism of Wood
Still, Wood has her detractors. On March 29, Morningstar analyst Robby Greengold issued a scathing critique of Ark Innovation.
“ARKK shows few signs of improving its risk management or ability to successfully navigate the challenging territory it explores,” he wrote.
Wood countered Greengold’s points in an interview with Magnifi Media by Tifin. “I do know there are companies like that one [Morningstar] that do not understand what we're doing,” she said.
If Wood’s investment performance rebounds, her true believers will say, “I told you so.” If it doesn’t, it will be interesting to see how long investors are willing to stick with her.
In recent trading, Ark Innovation bought 66,190 shares of electric vehicle titan Tesla (TSLA) Oct. 20, worth $13.7 million as of that day’s close.
Tesla has slumped 41% year to date and is the second biggest holding of Ark Innovation ETF.
Also Oct. 20, Ark Innovation dumped 59,252 shares of semiconductor giant Nvidia (NVDA), worth $7.2 million as of that day’s close.
