Cathie Wood’s prediction for 20% gain in 2021 deteriorates as flagship Ark fund posts worst return since inception

Catherine Wood, Managing Director and Chief Investment Officer of Ark Invest.
  • Cathie Wood’s expectation of a 20% gain in her flagship Ark Invest fund did not come true this year.
  • Instead, Ark Invest’s Disruptive Innovation ETF fell by more than 20% in 2021, which is its worst return since its inception.
  • Wood now expects the growth-oriented ETF to show a compound annual growth rate of up to 40% over the next 5 years.
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It has been a difficult year for investors at Ark Invest’s flagship Disruptive Innovation ETF, with the fund on track for its worst year of performance since launching in 2014.

This is after the ETF generated record returns of 150% in 2020, helping Ark Invest raise more than $ 17 billion in assets under management in its flagship fund. The ETF is down 21% in 2021, while the S&P 500 is up around 30% year-to-date.

Ark Invest’s low returns in 2021 likely surprised Cathie Wood, who forecast a five-year compound annual growth rate of 20% in December 2020. She now expects even higher returns going forward, with a recent blog post describing his opinion that the fund could generate a five-year compound annual growth rate of up to 40%.

But Wood’s prediction for a 20% gain in 2021 appeared to be correct earlier this year, with the fund rising 25% at its peak in February. Since then, a decline in work-from-home stocks and unprofitable tech names have taken a heavy toll on its performance.

The stocks that most affected Ark Invest’s performance were Teladoc and Zoom Video, both of which are down around 50% this year and lowered the fund by 550 and 386 basis points, respectively, according to the data. by Koyfin.

Those losses far exceeded Ark Invest’s best-performing position, Tesla, which is up more than 56% year-to-date and increased the fund by 286 basis points.

And it’s not just Ark Invest’s flagship ETF that has had a rough year, with five of Ark’s six active ETFs generating negative returns so far this year. The worst performing fund Ark Genomic Revolution ETF, down around 33% year to date, while the Ark Autonomous Technology and Robotics ETF is the best performing fund, up around 3%.

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