Cathie Wood’s ARK Innovation ETF is grappling with a significant setback of $473 million, primarily driven by the struggles of two major holdings—Tesla and Coinbase. While Tesla’s shares plunged over 12% after reporting a quarterly adjusted loss per share of 71 cents, missing estimates by 4%, Coinbase’s nearly 31% drop this year alone resulted in a loss of $282.9 million for the ARK Innovation ETF.
This challenging performance has taken a toll on ARK Innovation, posting a negative 11.6% total return this year, positioning it as the fourth worst-performing actively traded U.S. diversified ETF. Tesla, representing a 7.8% position in the portfolio, and Coinbase, the largest holding at 8.3%, are the primary contributors to this downturn.
The issues extend beyond these two giants, as all but two of ARK Innovation’s top 10 holdings are down more than 10% on average this year. In contrast, rival funds like iShares MSCI USA Momentum Factor ETF and T. Rowe Price Blue Chip Growth ETF have kicked off 2024 with positive returns.
While ARK Innovation faces challenges, investors are reminded of Cathie Wood’s remarkable comeback last year, emphasizing that underestimating ARK Innovation may not be prudent, despite the current portfolio setbacks.
