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Cathie Wood’s commitment to ‘disruptive innovation’ clearly knows no bounds. The fund manager continues to buy faltering tech players even as its flagship exchange-traded fund, ARKK Innovation ETFs (NYSEARC:ARKK), recorded losses of more than 60% this year. 2022 is shaping up to be Wood’s worst year as the slump in tech and growth stocks pushes ETF ARKK even further into the red.
Much of the country is looking for ways to cut spending, and many investors are reallocating their funds to safer value stocks and fixed-income picks. But Wood has calmly and collectively beefed up his portfolio with some of the biggest losers of 2022 like Roku (NASDAQ:ROKU), Coinbase (NASDAQ:PIECE OF MONEY) and Zoom (NASDAQ:ZM).
Roku, which is ARKK’s third-largest holding by market capitalization, has fallen more than 65% this year. Wood bought more than 135,000 shares of the plummeting streaming service last week.
It’s a similar story for cryptocurrency exchange Coinbase, ARKK’s 10th largest holding. COIN stock has fallen nearly 80% this year as a tragic victim of the crypto crash. Still, Wood continues to believe in distressed stocks, buying more than 300,000 shares in the past month.
Wood clings to its strategy of investing in innovation for life even as ETF ARKK approaches pandemic lows. Although ARK funds are taking on water, Wood continues to attract new investment.
ARKK ETF tumbles as Cathie Wood underestimates impact of inflation
Even as the United States entered a bear market to start the week, Wood only expressed confidence in the economy going forward. In an interview with Goldman Sachs, she speculated that inflation had already passed its peak.
Even after Friday’s startling Consumer Price Index report, Wood sees inflation as a passing problem:
“I think we’re on the other side of the inflation problem…I think the rates market is telling us inflation will eventually come down to levels consistent with positive real growth, and I have was surprised that more investors didn’t seem more reassured by that.”
Despite ARKK’s runaway performance this year, Wood’s funds continue to attract investors, receiving $167 million in inflows this year.
Interestingly, the Tuttle Capital Short Innovation ETF (NYSEARC:SARK), the fund bypassing Wood’s ARKK, had a good year. SARK is up an incredible 89% this year, just betting against Wood’s flagship fund.
It remains to be seen whether Wood’s growth investments will translate to the 40% compound annual rate of return she’s already alluded to. Currently, the ARKK ETF is in the red 60% this year, while the S&P500 lost 21% over the same period.
As of the date of publication, Shrey Dua does not hold (either directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.