Cathie Wood’s ARKK ETF Underperforms as Nasdaq Jumps

Cathie Wood’s Ark Innovation ETF (ARKK) has traded between $72.68 and $82.35 since April. The fund is down 1.82% year-to-date while the Nasdaq 100 has risen 15.90%. Over the past 12 months ARKK has gained about 9% versus roughly 28% for the Nasdaq 100.

ARKK has not fully participated in the recent artificial intelligence-led rally. The fund holds concentrated positions in high-growth, high-volatility companies that have produced mixed results this year.

Tesla, ARKK’s largest holding, fell from near $500 to around $375 and trades at a forward price-to-earnings ratio near 185. The company faces competition from Chinese electric-vehicle makers Nio, BYD, XPeng and Li Auto. Other top holdings are off peak levels: Tempus AI is more than 50% below last year’s highs, CRISPR Therapeutics is down about 32%, Robinhood about 36% and Shopify about 35%. SpaceX is more than 30% below its high. Coinbase, Circle Internet, Roblox, Palantir and CoreWeave have slipped from prior peaks.

Crypto-related weakness has affected several fund holdings. Coinbase’s trading volume has declined, and the USDC stablecoin issued by Circle fell in market capitalization from about $80 billion to roughly $74 billion, a change that has weighed on both companies’ shares.

Longer-term figures show a wider gap with major benchmarks. Over five years ARKK is down about 35% while the Nasdaq 100 has gained roughly 103%. Since ARKK’s inception the ETF has returned about 275% versus roughly 600% for the Nasdaq 100. Based on those five-year numbers, a $10,000 investment in ARKK would be worth about $6,500 today; the same amount in the Nasdaq 100 would be about $20,300, excluding dividends.

ARKK charges an expense ratio of 0.75%, which equals $75 a year on a $10,000 investment. By comparison, the Vanguard S&P 500 ETF (VOO) charges about 0.03% ($3 on $10,000) and the Nasdaq-tracking QQQM carries annual costs near $15 on the same amount. Data from S&P Global shows roughly 90% of active funds underperformed the S&P 500 over the past 15 years.

The fund has recorded periods of strong gains when large holdings rallied and stretches of underperformance over multi-year periods.