Cathie Wood’s ARK Innovation ETF Is Selling Off—and It May Get Worse

Cathie Wood’s ARK Innovation ETF Is Selling Off—and It May Get Worse

Cathie Wood’s ARK Innovation ETF Is Selling Off—and It May Get Worse

One of the hottest exchange-traded funds is sliding again, and the selloff may only get worse.

The ARK Innovation ETF (ticker: ARKK) delivered a 153% return in 2020. But it’s now giving up those gains quickly. The ETF, which is actively managed by ARK Invest CEO Cathie Wood and her team, is down 27% over the last three months, including an 13% decline in the past week alone. It was falling again on Thursday, down 2.6% to $108.62 at 11:56 a.m.

The ETF focuses on “disruptive innovation” stocks in areas like biotech, robotics, artificial intelligence, blockchain, and financial technology. It’s a concentrated, thematic-based fund that takes big swings on a handful of high-growth stocks.

The fund’s top 10 holdings account for nearly half the portfolio. Tesla (TSLA) is its top holding at about 11% of assets, followed by Square (SQ) at 6.5%, Teladoc Health (TDOC) at 6.3%, and Roku (ROKU) at 5.5%. The rest of its top 10 consists of Zillow Group (Z), Zoom Video Communications (ZM), Baidu (BIDU), Shopify (SHOP), Spotify Technology (SPOT), and Exact Sciences (EXAS).

Many of these stocks have tumbled as market leadership shifted from high-growth, high-multiple stocks to value and cyclicals. While the ETF offers exposure to many innovative areas of tech that may be great long-term bets, it’s ailing as investors’ appetite for risk cools off and crowded momentum trades reverse.

Tesla, for instance, is down 22% in the last three months. Zoom, Zillow, and Baidu are off about 30%. Spotify and Exact Sciences are each down 25%. Teladoc is dragging the portfolio down too, losing 47% in the last three months, including a 21% slump since April 26.

The ETF is still a giant with $21 billion in assets, making it one of the largest actively managed ETFs. But it’s shedding assets; investors redeemed $770 million in shares over the past week and $866 million overall in the past month, according to FactSet.