No one wants to be known as the largest wealth destroyer — especially when the S&P 500 is rising. But that's exactly what Morningstar is calling Cathie Wood's ARK Family of funds.
ARK ETF Trust, which runs the popular ARK Innovation ETF, has wiped out $14.3 billion in investors' wealth over the past 10 years, says a new analysis from Morningstar. That ranks it as the No. 1 wealth destroying fund family in that time. ARK has vaporized twice the value of No. 2, KraneShares, Morningstar says.
Losing this kind of money on an ETF stings. Other mutual funds and ETFs minted $11.1 trillion in wealth in this period.
"After garnering huge asset flows in 2020 and 2021 (totaling an estimated $29.2 billion), its funds were decimated in the 2022 bear market, with losses ranging from 34.1% to 67.5% for the year," said Morningstar's Amy Arnott. "Many of its funds enjoyed a strong rebound in 2023, but that wasn't enough to offset their previous losses."
And this year isn't off to a good start for ARK, either.
ARK Destroyer
What's hurting the ARK family's performance? It's mainly the flagship ARK Innovation Fund. The $9.3 billion-in-assets ETF single-handedly destroyed $7.1 billion in investors' wealth in the past 10 years through December 2023, Morningstar found.
That ranks ARK Innovation as the third worst destroyer of value. And get this. Investors paid a 0.75% annual fee for the privilege. The biggest individual fund wealth destroyer is ProShares UltraPro Short QQQ, which uses leverage to bet against the soaring Nasdaq 100. But at least investors know you shouldn't hold this ETF long term.
But it's not the only struggling ARK fund. ARK Genomic Revolution ETF shredded $4.2 billion in wealth in 10 years. That makes it the fifth worst fund.
This year is off to a rough start for ARK Innovation. The popular ETF is down 12.1% this year, says Morningstar Direct. That's while the S&P 500 is up nearly 3%. ARK Innovation is the second-worst U.S. diversified ETF this year.
Meanwhile, large cap-growth and momentum stocks are pulling ahead.
"The biggest value destroyers in the fund industry illustrate that there's no guarantee of success, even during a generally favorable market environment," Arnott said. "They also provide a valuable case study in how not to invest."
Top Wealth Destroyers
Among fund families in past 10 years
| Family | Wealth destroyed ($ billions) | Size ($ billions) |
|---|---|---|
| ARK ETF Trust | -$14.3 | $16.1 |
| Krane Shares | -6.5 | 7.2 |
| Credit Suisse | -5.3 | 2.3 |
| Global X Funds | -4.6 | 39.5 |
| ProShares | -4.3 | 68.8 |
| Barclays | -3 | 1.3 |
| AdvisorShares | -2.2 | 1 |
| Cromwell Funds | -1.9 | 0.4 |
| ETFMG | -0.5 | 3.7 |
| Roundhill Investments | -0.55 | 0.7 |
