ARK Innovation ETF

ARKK

Market cap $7.47B

I am a huge fan of Cathie Wood. I am also an ardent critic. Why? She does not use any type of risk management.

Markets move fast, and in the ETF corner of the world, sometimes it feels like it's practically impossible to keep up. Product development and proliferation have been so intense in recent months.

ARK Innovation ETF has outperformed the NASDAQ in the past six months, but faces significant long-term challenges. Technicals show the long-term uptrend remains, yet negative divergence and declining volume signal a weakening bull run for ARKK. ARKK's higher fees and substantially greater risk compared to QQQ are not justified by its long-term underperformance.

Hot take of the day: buy a fund that has climbed 111% in the past six months and that appears overbought. ARKK is exposed to the themes that I believe will create substantial value over the very long run. Valuation does not matter as much, since standard metrics like next-year P/E capture expected short-term performance and do not match the long-term duration of ARKK's investments.

The US stock market is highly concentrated, with technology and tech-related stocks now comprising about 55% of total market cap. This concentration justifies higher valuation multiples for SPY, as tech companies have stronger margins and more stable earnings than defensive sectors. There is a stark divergence in performance between speculative tech ETFs like ARKK and CHAT versus defensive dividend ETFs such as SCHD and VNQ.

Cathie Wood, CEO & CIO of ARK Invest, speaks about market optimism, US inflation, the crypto industry and IPOs. Wood speaks with Bloomberg's Katie Greifeld, Eric Balchunas and Scarlet Fu on "Bloomberg ETF IQ".

ARKK has performed very well since the April crash, but its all-time performance is still lacking, and it still sits below its 2021 high. It has critical problems, such as its active trading component, leading to a continuous cutting of winners and adding of losers; new additions do not inspire confidence. I do not rate ARKK well, and continue to believe it is a hold. Do not short moonshot investments, but it's not worthwhile investing in either, despite past returns.

Active ETFs issuance has been torrid since 2021. At the start of that year there were 535 active ETFs versus 1,959 passive ETFs.

The ARKK Innovation ETF has surged nearly 50% in 2025, outperforming VOO and QQQ, driven by strong crypto and fintech holdings. Despite recent outperformance, ARKK remains highly volatile, expensive (0.75% expense ratio), and concentrated, with 58% in its top 10 holdings. While Wood's conviction has paid off, I remain cautious due to ARKK's risk, high fees, and preference for direct crypto exposure over proxy stocks.

Cathie Wood is the founder and CEO of Ark Investment Management, which operates a dozen exchange-traded funds (ETFs) centered around innovative technologies. Electric vehicles, cryptocurrency, e-commerce, social media, robotics, autonomous mobility, and artificial intelligence (AI) are just a few of Ark's areas of interest.