Has Cathie Wood's Flagship ARK Innovation ETF Got Its MoJo Again?
Cathie Wood and her flagship ARK Innovation ETF (ARKK) have struggled in recent years. I first wrote about ARKK in early 2022. In my January 10, 2022 Seeking Alpha article entitled “Is ARKK A Buy, Sell, Or Hold As It Dips?” I presented an analysis of ARKK’s rise during covid, based on its ETF holdings intimately linked to Covid. I noted:
“The global shutdown, when work/study/stay at home decrees dictated a change in the lifestyle of workers and students, gave rise to a demand for products such as PCs, video conferencing, and even exercise equipment when gyms shut down. ARKK stocks benefited.”
That thesis proved prescient. ARKK soared 152% in 2020. But the sharp pullback came just as quickly. In 2021–2022, ARKK’s core themes lost steam as the pandemic faded, and the ETF collapsed well ahead of the broader market. Despite its thematic branding, ARKK largely missed the generative AI boom of 2023–2024 — and especially the Nvidia-led rally. That underperformance raised serious questions about Wood’s timing, her adherence to legacy “disruptors,” and her active trading approach.
Understanding the Rise and Fall: A Look Back at ARKK’s Pre- and Post-COVID Holdings
In my 2022 article, I analyzed ARKK’s Top 10 Holdings as of January 13, 2020 — just before the COVID-19 pandemic — and again at year-end 2021. These two snapshots revealed how Wood shifted exposure during ARKK’s rapid ascent and subsequent retreat. In Table 1 below, Tesla topped the list with 20.31% of assets.
By December 31, 2021, the picture had changed. As shown in Table 2, Tesla remained the top holding, but its weighting had dropped to 7.74%, even though it was the only Top 10 stock with a positive return in 2021. The rest of the top holdings had been shuffled dramatically — and not for the better.
Key Takeaways from the 2020–2021 Shift:
Tesla’s price increased, yet its weight in ARKK declined — a counterintuitive result of Cathie Wood trimming as the stock rose.
Seven of the Top 10 holdings in 2021 were new entries; their average return in 2021 was –32%.
Wood’s active rebalancing often saw her buying falling stocks without waiting for clear technical or macro bottoms.
This last point remains one of the most mystifying aspects of Wood’s approach. While she champions long-term disruption, her tactical timing has frequently conflicted with traditional capital preservation logic. Her tendency to double down as stocks fall — while consistent with her high-conviction style — has exposed investors to prolonged drawdowns.
The Disruptive Innovation Question: How Long Is Too Long?
ARKK’s founding principle is exposure to “disruptive innovation.” Yet that raises a key question: how long does a company remain truly disruptive before competitors catch up or macro conditions shift? Since ARKK’s inception in 2014, many of its early darlings have matured or stumbled. And yet, Wood’s Top 10 list in 2025 still resembles that of years past — with Tesla, Roku, and other familiar names.
Is it loyalty to vision? Or reluctance to adapt to a new S-curve? Wood’s psychological profile as an investor leans toward thematic persistence over tactical flexibility. Her worldview is built on exponential change, but she often resists rotating out of positions when narratives weaken. Instead, she anticipates rebounds and reallocates even deeper into those she believes will lead the “next leg” of disruption. When right, as in 2020 or Q2 2025, the payoff is enormous. When wrong, the drawdowns are punishing.
The Performance Rebound: Real or Mirage?
Fast forward to mid-2025. ARKK is up 42.4% in Q2 alone, and 60.8% for the trailing one-year period — sharply outpacing the S&P 500’s 12.1% one-year gain. It’s ARKK’s best relative quarter since early 2021. But even with this recovery, the fund remains well below its pandemic-era high. Chart 1 tells the story clearly: 1-Year period, is up 57.69% since inception compared to just 9.95 for the S&P Technology Index (^IXT).
Chart 1
Chart 2 underscores the long-term volatility of ARK Innovation ETF relative to the S&P Technology Select Sector Index. While ARKK delivered an explosive 500%+ surge during the COVID-fueled innovation rally, it has since retraced significantly. As of June 2025, ARKK is up 254% from its 2016 levels — well behind the IXT’s 503% gain. Even with its Q2 2025 rebound, ARKK remains a high-beta bet trailing traditional tech.
Chart 2
According to Table 3, the current Top 10 holdings of ARK Innovation ETF as of July 9, 2025, reflect a sharp evolution in thematic exposure.