Ark Invest CEO Cathie Wood.
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Cathie Wood’s flagship Ark fund is “dead money”, said Larry McDonald, citing its poor longer-term performance.
Despite its gains in 2023, the Ark Innovation ETF is still down by about 18% from five years ago, the markets guru pointed out.
“They said to get long sexy innovation, what they didn’t say is you are actually short the Fed, rate hikes, and sustained inflation…” he added.
Larry McDonald is the latest critic of Cathie Wood’s flagship fund.
The Ark Innovation ETF is “dead money” in terms of its longer-term performance, the founder of the “Bear Traps Report” said, pointing out the fund is down 18% from five years ago despite a much-hyped pandemic-era rally.
While Wood’s firm has repeatedly touted the merits of investing in innovative technologies, it may have underplayed the fact that such growth-focused holdings could prove risky amid high inflation and rising interest rates, he suggested.
The Ark Innovation ETF, known by its ticker ARKK, has plunged almost 75% from its 2021 highs as the Federal Reserve jacked up interest rates to quell consumer-price pressures.
“Five years, dead money — Close to 17% off the summer of 2018 levels — ARKK, they said to get long sexy innovation, what they didn’t say is you are actually short the Fed, rate hikes, and sustained inflation…” McDonald said in a recent post on X.
Over the past five years, the Ark fund has been on a rollercoaster performance. From all six of Wood’s exchange-traded funds notching stunning returns of more than 100% in 2020, to her main ARKK ETF soaring to an all-time high above $150 one year later, Ark Invest has certainly seen some big rallies.
But more recently, Wood and her fund have suffered major backlash from top investors.
Billionaire Bill Gross and “Big Short” investor Michael Burry have openly slated Wood, pointing to ARKK’s poor performance over the past couple of years.
In March, Wood revealed that ARKK notched a loss of more than $2 billion from selling stocks during 2022’s brutal market slump.
Wood’s reputation as a star stock picker also got a bruising due to Ark’s poor-timed Nvidia bets. The fund sold most of the chipmaker’s stock last year before the shares saw a massive 2023 rally fueled by an AI boom.