Cathie Wood's flagship fund has rebounded 17% as tech and crypto stocks offer investors a flicker of hope

Cathie Wood's flagship fund has rebounded 17% as tech and crypto stocks offer investors a flicker of hope
Cathie Wood speaks on a panel at Miami's Bitcoin 2022 conference.Rebecca Blackwell/AP Photo
  • Cathie Wood's Ark Innovation ETF has outperformed the S&P 500 over the past few weeks after a terrible start to 2022.
  • Bond yields have fallen in that timespan, while some investors believe tech stocks are due to rebound.

Cathie Wood's flagship Ark Innovation exchange-traded fund has staged a fightback of sorts in recent weeks after a dreadful start to 2022.

The ETF, which trades under the ticker ARKK, is up 17% over the last three weeks, since plummeting to a two-year low of $36.63 on May 11. The Nasdaq has risen 5.6% over the same time period, while the S&P 500 is up 4.4%.

Still, ARKK is down 55.4% year-to-date despite its moderate resurgence, and closed at $43.16 on Friday.

Wood's funds have suffered thanks in part to the Federal Reserve's aggressive plan for interest-rate hikes, which has disproportionately hurt growth and tech stocks by slowing down their cash flows.

The ARKK fund invests in disruptive technology, prioritizing companies' long-term growth prospects. Its top three holdings — in electric-vehicle maker Tesla, video platform Zoom Video Communications and streaming hardware maker Roku — are respectively down 34.3%, 42.6%, and 63.1% in 2022 so far.


Rather than changing her investing strategies, Wood has kept buying those old favorites over the past month. The Ark Invest ETF has built up a sizeable position in Roku, according to Cathie's Ark, and the stock has rallied 11% since May 11.

Crypto stocks Block and Coinbase, which are ARKK's fourth- and ninth-largest holdings, have also risen 17% and 26% since May 11. That was the day the TerraUSD stablecoin and its sister token luna both imploded, prompting investors to ditch risk assets such as tech stocks.

"Almost immediately after breaking through the 'official' bear-market marker of a 20% decline from their peak, stocks rallied as bargain-hunters emerged," Morningstar's chief US market strategist Dave Sekera said. "The growth category is now the most undervalued, trading at a 19% discount to our fair value."

ARKK's rally has also coincided with a slide in bond yields. 10-year Treasury notes currently offer yields of around 2.955%, down from 3.124% on May 6. That's left investors looking to other assets as a source of returns.

Read more: Ark Invest's research chief lays out the firm's 5 disruptive tech platforms — and argues that despite a disappointing 2021, Cathie Wood is still in a strong position as 'innovation's now on sale'