- Cathie Wood’s ARK Innovation (ARKK) ETF is having a challenging year, underperforming against the S&P 500.
- Despite a 13.2% drop this year, ARK Innovation is not the worst-performing ETF, with WilderHill Clean Energy ETF (PBW) down 26.3%.
- Factors contributing to ARK Innovation’s decline include falling Tesla shares and losses in 25 out of the 35 stocks in the portfolio.
ARK Innovation ETF faces a tough year, underperforming against the S&P 500, with factors such as falling Tesla shares contributing to its decline.
ARK Innovation’s Underperformance
ARK Innovation ETF, managed by Cathie Wood, is down 13.2% this year, a stark contrast to the SPDR S&P 500 ETF Trust (SPY) which is up nearly 8%. However, ARK Innovation is not the worst-performing ETF, with WilderHill Clean Energy ETF (PBW) experiencing a 26.3% drop. The losses in both ETFs come amidst rising inflation concerns as we approach summer.
Contributing Factors to ARK’s Decline
While it’s easy to attribute WilderHill Clean Energy’s decline to political wrangling over green energy subsidies, the factors pushing ARK Innovation lower are more varied. Falling Tesla shares, which account for more than a tenth of ARK Innovation’s portfolio, are a significant contributor. However, the woes extend beyond Tesla, with 25 out of the 35 stocks in the portfolio experiencing losses this year, with the average losing stock down nearly 30%.
Major Losses in ARK’s Portfolio
Four stocks in the ARK Innovation portfolio have lost more than half their value this year. These include Pacific Biosciences of California (PACB), down nearly 80%, and 2U (TWOU), Verve Therapeutics (VERV), and 10X Genomics (TXG), all of which are relatively small positions in the ARK Innovation portfolio.
ARK Innovation: Not the Worst ETF This Year
Despite the significant losses, ARK Innovation investors can take solace in the fact that at least one ETF, the WilderHill Clean Energy ETF, is performing worse this year.
Conclusion
While ARK Innovation ETF has had a challenging year, it is not the worst-performing ETF. Factors such as falling Tesla shares and losses in a majority of the stocks in the portfolio have contributed to its decline. However, investors can take comfort in the fact that other ETFs are performing worse, and remain hopeful for a potential turnaround.
