Cathie Wood’s ARK Innovation ETF (CBOE: ARKK) is shedding assets this year as it continues to underperform the technology-heavy Nasdaq 100 Index.

ARKK ETF Has Shed $313 Million in Assets This Year

Investors have withdrawn more than $313 million from the fund so far this year, bringing its assets under management down to $7.2 billion, well below its peak of $29 billion. The outflows stand in sharp contrast to the broader U.S. ETF market, which has attracted more than $1 trillion in inflows this year.

ARKK stock has gained just 2% year-to-date, while the Nasdaq 100 and S&P 500 have risen 20% and 9%, respectively. It has slumped by 31% in the last five years, while the two indices have jumped by 116% and 80%, respectively. 

The fund has underperformed popular passive alternatives despite its higher costs. ARKK carries an expense ratio of 0.75%, significantly higher than the Vanguard S&P 500 ETF (NASDAQ:VOO) and the Invesco NASDAQ 100 ETF (NASDAQ:QQQM), which charge just 0.03% and 0.015%, respectively.

Top ARKK Innovation Fund Stocks Have Retreated

ARKK stock has lagged behind the key US benchmarks as its top holdings have continued to struggle. Tesla (NASDAQ:TSLA), its biggest holding, has retreated by 20% from its highest point this year as the company has faced major challenges. 

Its first-quarter deliveries were much lower than expected, while competition in key markets like Europe and China is heating up. A year after unveiling its robotaxi business, its fleet is made up of just 42 vehicles. Waymo has over 500 vehicles. 

Robinhood Markets (NASDAQ:HOOD), its other top name, has retreated by over 30% from its all-time high because of its exposure to the cryptocurrency industry, which is going through a prolonged winter. CRISPR Therapeutics (NASDAQ:CRSP), its third-biggest holding, has barely moved this year. 

Most recently, Cathie Wood made SpaceX (NASDAQ:SPCX) one of ARKK’s biggest holdings after buying shares worth over $300 million. After soaring after its IPO, SpaceX stock has erased some of these gains and is down by 18% from its all-time high. 

ARKK stock has also struggled because of its exposure to the crypto industry. In addition to Robinhood, it also owns Coinbase and Circle Internet Group, which have struggled as the industry has faced major headwinds. 

Most importantly, ARKK has not invested in companies in the memory industry that have helped to power the Nasdaq 100 and S&P 500 to their all-time highs this year. This includes companies like Sandisk, Seagate, and Western Digital. 

ARKK’s performance is a good example of how it is hard for actively managed funds to beat their passive competitors. Indeed, the SPIVA Scorecard shows that 90% of all funds have underperformed the S&P 500 Index in the last 15 years. 88% have underperformed in the last five years, and 78% in the last three. 

Image: Shutterstock