- Ark Invest's flagship ETF has enjoyed net inflows of $1.3 billion so far in 2022 despite a sharp sell-off in the strategy.
- The Disruptive Innovation ETF is down 75% from its record high, but investors are sticking with Cathie Wood.
- Here's why Wood believes her firm is still seeing net inflows despite the ongoing market decline.
Investors can't seem to get enough of Ark Invest's flagship ETF based on year-to-date net inflows of $1.3 billion through Monday, according to data from Bloomberg.
That's despite the fact that the Ark Invest Disruptive Innovation ETF has sold off 75% from its record high, and is down 58% year-to-date.
The ETF was down another 5% in Tuesday trades and fell below $40 for the first time since the April 2020 as investors continue to worry about rising interest rates, higher inflation, and the potential for an economic recession.
The weakness in Ark's flagship ETF puts its assets under management well below its record of $28 billion reached in 2021. The ETF currently has $8.8 billion in assets under management, according to data from Koyfin.
Significant declines in some of Ark Invest's top holdings — including Teladoc, Roku, and Zoom Video — have driven the steep drop. Of the ETF's 37 holdings, none of them are positive year-to-date, and only Tesla has positive gains over the past year.
The willingness of investors to stick with Wood and her disruptive investment strategy throughout the painful decline could be attributed to the firm's willingness to share its research with others. That's according to Wood, who shared her views in a market update video on Friday.
"Ark is net inflowing this year, and I think it's because we give away our research, and our research is unique. It's original research. And we're trying to help people understand how the world is going to change during the next five to 10 years, and how rapidly it's going to change," Wood said.
Additionally, she believes her strategy's comparison to the Nasdaq 100 has also helped garner net inflows from its investors in 2022. That's because while the Nasdaq is a tech-heavy index, Wood estimates it is only exposed to 25% of truly disruptive companies, while ARK is solely focused on those innovative companies.
"Most of our stocks are not in broad-based benchmarks," she said. But that could be a double-edged sword, as stocks that are excluded from indexes see little to no buying pressure from the millions of passive investors that dollar-cost-average into the stock market via their 401(k) every two weeks when they get paid.