"Wood Sister" Wood Myth Fades? ARKK Retreats Over 50% in Five Years, Asset Size Shrinks Drastically

Many years have passed, and "Wood Sister" Wood, who once rose to fame during the COVID-19 pandemic investment frenzy, is now facing a somewhat embarrassing milestone. Under Wood's leadership, the flagship product ARK Innovation ETF (ARKK.US) earlier this month recorded its longest continuous decline in history, falling for 10 consecutive trading days. Looking back over the past five years, spanning the late stages of the pandemic, interest rate hikes, and market rebounds, ARKK has accumulated a decline of over 50%, while the Nasdaq 100 index has risen by about 80% during the same period, highlighting a significant performance gap between the two. From a broader perspective of the "post-pandemic era," the differentiation between ARKK and major benchmark indices is particularly pronounced. Investors who once followed Wood's "disruptive innovation" investment philosophy, betting on areas such as electric vehicles, genomics, and fintech, have watched their bets falter in the background of rapidly rising interest rates and a market becoming increasingly critical of high valuation growth stocks. ARKK's assets have also significantly shrunk. In February 2021, at the peak of pandemic stimulus and liquidity excess, the fund's assets ballooned to around $28 billion; now it is only about $6 billion, shrinking by about 80% from its peak. Since the beginning of this year, ARKK has fallen by about 9% and recorded net outflows of about $120 million. These numbers reflect the speed of market style rotation and the cost borne by investors who entered at a high valuation. While investors who have held the fund long-term have seen reasonable overall returns, the fund flow data reveals another reality, as significant funds flowed in at the peak of the market when valuations were highest. ETF.com President and Head of Research Dave Nadig pointed out, "The ability of active managers to continue to hit the mark over a long period of time is extremely rare. The mathematical results of active management often show that ordinary investors eventually underperform the market." Wood often gets compared to tech indices, but her portfolio differs significantly from traditional tech indices. ARKK has a higher allocation in areas like genomics and digital assets, where the weights in the Nasdaq 100 are not significant. Wood herself has repeatedly emphasized the importance of the "time dimension." Data shows that over the past three years, ARKK has an annualized return rate of over 18%, ranking in the top 8% among mid-cap growth funds in Morningstar's statistics; but in terms of five-year performance, it is close to the bottom of the same category. However, over a 10-year period, ARKK's annualized return rate still exceeds 17%, placing it in the top 5%. In her statement, Wood mentioned that her investment process is not limited to traditional style frameworks, and in the long run, ARKK, ARKQ, and ARKW have all ranked in the top tenth percentile of Morningstar's similar funds within their complete historical intervals. "Only selecting shorter time periods for comparison can distort the overall picture. The annualized return since inception is the fairest industry standard." However, Morningstar has given Wood's investment strategy a negative rating, believing that the fund's performance may lag behind benchmarks and the majority of peers in terms of risk-adjusted returns. Although ARKK has outperformed many similar products over the past decade, its volatility is roughly twice as high. In the bull market driven by loose policies and fiscal stimulus, Wood's highly concentrated bets once achieved impressive returns; but as monetary policy tightens and market leadership narrows down to a few mega-cap companies, these same holdings have become a drag. ARKK remains highly concentrated in companies that rely on future earnings expectations, making it especially sensitive to rising financing costs, which magnifies its net asset value volatility. One of its largest holdings, Tesla, Inc. (TSLA.US), has seen its stock price decline this year, while holdings such as Tempus AI (TEM.US) and Roku Inc (ROKU.US) have also struggled. Price movements alone are not enough to fully capture investors' true experiences. Since inception, ARKK has accumulated nearly $12 billion in net inflows, but as of late January, the fund's assets totaled only about $6.2 billion, meaning that around $6 billion of investors' funds have "evaporated" in market fluctuations. Measured by this indicator, ARKK has become one of the products with the greatest deviation between fund inflows and existing assets in the US ETF market of around $14 trillion, highlighting significant wealth erosion. Wood has long emphasized that ARKK is not meant to replicate major market indices but rather serve as a complementary tool in a portfolio, provided that investors practice disciplined rebalancing by reducing holdings during uptrends and adding during pullbacks. For investors who bought in at highs and held all the way, this mechanism indeed operates as designed, but the accompanying volatility far exceeds most people's psychological expectations. Eric Balchunas stated, "Although some of her predictions have not materialized, Wood has always been very honest about what the ETF will invest in and has never deviated from that direction. 'Tourist-type' investors have left, leaving behind true supporters, which may actually be a good thing for her strategy."