Cathie Wood’s Ark Innovation Fund (ARKK) ETF outflows are still rising

Cathie Wood’s underperforming Ark Innovation Fund (ARKK) ETF outflows are increasing as investors doubt its recovery process. The fund, which peaked during the pandemic, has shrunk dramatically since then.

According to its website, ARKK ETF has over $9.2 billion in net assets, down from over $40 billion during its peak. Data by ETF.com shows that outflows peaked in June when investors dumped over $452 million worth of shares. This month, investors have dumped over $254.5 million worth of assets, up from $87 million in August.

In total, investors have exited assets over $665 million worth of assets this year even as technology stocks have jumped. The Nasdaq 100 index, which tracks the biggest tech companies in the US, has jumped by more than 45% this year. In contrast, ARKK ETF stock has jumped by 40% and is down by 0.32% in the past 12 months.

ARKK has benefited by the rebound of several key constituents. Tesla, the biggest holding, has jumped by 155% while Roku has soared by over 40%. Coinbase, the embattled crypto exchange, has risen by 148%, helped by Bitcoin’s recovery. Other ARKK stocks like DraftKings, Twilio, and Shopify have also recovered.

A key concern among ARKK ETF investors is that its expense ratio is higher than other tech-focused funds. It has a 0.75% ratio, meaning an investor with $100,000 pays $750 in fees annually. A similar investor in Invesco Nasdaq 100 ETF (QQQM) pays just $150. 

Premium fees would make sense for an ETF that is consistently beating the market. While ARKK ETF outperformed the tech sector in 2020 and 2021, it has not done well since then. Data by SeekingAlpha shows that ARKK has returned -51% in the past three years while Invesco QQQ has risen by 37% in the same period. It has dropped by 9% in the past five years while QQQ has jumped by over 100% in the same period.