• After a three-year decline, investors are increasing outflows from Cathie Wood’s ARK funds.

• The ARK ETF suite has seen net outflows of $2.2 billion so far this year, three times the amount expected in 2023.

• A series of bad bets and missed opportunities have led to a 72% decline in ARK’s flagship fund.

Investors in Cathie Wood’s ARK ETFs are seeing an acceleration in outflows after a series of bad investments and a painful three-year decline.

The ARK family of ETFs has seen net outflows of $2.2 billion this year, about three times the $760 million in outflows seen in all of 2023.

ARK ETFs total assets under management of $11.1 billion, down 81% from their 2021 high of $59 billion.

The sharp decline in assets under management coincides with a painful three-year stretch for Wood’s disruptive innovation investment strategy. Its flagship ARK Innovation ETF has fallen 72% since its February 2021 peak, and some of its top bets are still faltering.

ARK has long counted Tesla among its top holdings, but the automaker’s more than 40 percent drop in share price since the beginning of the year has weighed heavily on the performance of the ARK Innovation ETF, which is down 16 percent year-to-date despite a positive return for the broader equity market.

That dynamic – the sharp decline in ARK funds while the broader stock market hits record highs – was highlighted by Morningstar earlier this year. The investment firm pointed out that ARK ETFs wiped out $14 billion worth of wealth over the past decade as investors piled into the fund just before its peak.

“These funds have managed to lose value for shareholders, even during a generally optimistic market,” said Morningstar analyst Amy Arnott.

Another pain point for ARK investors is the fact that the funds missed out on the hottest artificial intelligence deal on the market, as Wood sold most of her funds’ Nvidia holdings just before the stock began to rise in late 2022.

Other top holdings in the ARK funds include Roku and Unity Software, both of which are down more than 30% year-to-date, and Zoom Video, which is down 16% year-to-date.

Despite the significant underperformance, Wood largely defended her portfolio and recently argued that Tesla’s stock price could rise to $2,000 per share in the next five years.

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