Why Are Cathie Wood’s Ark ETFs Still Trailing Nasdaq Stocks? – ARK Innovation ETF (ARCA:ARKK)
From their all-time highs towards the end of 2021, tech stocks have suffered a significant blow from the Federal Reserve’s interest rate hike cycle.
The sectors and industries that, before and during the pandemic, were the big winners in the wake of historically low borrowing costs, subsequently recorded the most marked losses.
Cathie Wood‘s Ark Invest ETFs, which are aimed to capture disruptive innovation and target long-term growth, continue to trade 34% to 69% below their highs from the end of 2021. In contrast, the tech-heavy Nasdaq 100 index, which is tracked by the Invesco QQQ Trust QQQ, is trading only 20% off its all-time high.
The ARK Innovation ETF ARKK, the largest Ark ETF, has also been the poorest performer among Wood’s ETFs, losing 69% of its value in the last year.
Read next: ‘Very Big Mistake’: Cathie Wood Warns Banking Crisis Could Bleed Into Earning
What is causing this difference in performance between Ark ETFs and the Nasdaq index?
ARKK Vs. QQQ
No company in the ARKK ETF portfolio has a positive return over a one-year period. Conversely, the Nasdaq 100 index, or QQQ, has seen a positive contribution to overall performance from stocks such as Gilead Sciences, Inc. GILD which is up 43% year to date; T-Mobile US, Inc. TMUS, which is up 14% year-to-date; and PepsiCo, Inc. PEP, which is up 12% year-to-date.
Coinbase Global, Inc. COIN has proven to be Wood’s worst bet so far, with a 6.5% weight in the ARKK portfolio and a 66% decline over the last year. Coinbase is not a member of the Nasdaq index.
Tesla, Inc. TSLA is represented in both the ARKK and the Nasdaq 100 indexes, with a weight of 10.3% in the former and 3.7% in the latter. Tesla is still about 50% lower than a year ago; therefore its negative performance has been more pronounced in the ARKK ETF than in the Nasdaq.
Cathie Wood’s other losing investments include Unity Software Inc. U and Roku Inc. ROKU. Their respective weights in the ARKK ETF are 3.3% and 7.7%, and they have lost 71% and 50% in the past year.
Read also: Move Over Apple, Google, Amazon: Cathie Wood Says There’s Now A Cooler Kid In ‘Innovation’ Town
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