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Cathie Wood’s ARKK ETF hemorrhaged 29.9% in Q1

Yahoo Finance's Alexandra Semenova joins the Live show to discuss performance for Cathie Wood's ARK innovation fund.

Video transcript

JULIE HYMAN: When it comes to Cathie Wood, mm, I don't know-- I don't know if she should be maybe not splitting her attention. I don't know. If you look at her Ark investments flagship fund, it had another weak performance, yes, in the first quarter of the year. Our Alexandra Semenova has been looking at that performance, and what are you seeing there? What have been the numbers for Cathie Wood? ALEXANDRA SEMENOVA: Well, guys, Cathie Wood's popular Ark Innovation Fund has recovered a bit since its lows earlier this year, but the fund is still negative on the year. And it was at the center of the tech sell-off that we saw last quarter, as investors, you know, rotated out of some of those highly volatile growth names that she typically favors in her portfolio. Ark Innovation, which trades under the ticker RKK, was Morningstar's worst performing US equity fund in Q1 per a recent report from the firm. Last year, Cathie Wood became the center of criticism when her fund posted a loss of 24% after returning over 150% in 2020. But this year, Ark lost about 30% in just the first quarter alone. Now, by comparison, the NASDAQ, which is a proxy for tech stocks, lost about 9% during the quarter. And the Russell Mid-Cap Growth Index logged a drop of about 12.6%. That downturn for Ark also prompted a downgrade from Morningstar last week to negative, which is the lowest level on the analyst scale. The firm said in a scathing note that Ark Invest has failed to protect its investors from brutal drawdowns and shows no signs of improving its risk management. Cathie Wood has repeatedly doubled down on her strategy despite the drawdowns. She regularly appears on webcasts and posts on social media platforms. And she even took to Twitter this weekend to say that she thought that the Federal Reserve would be making a mistake hiking interest rates, as we know that her fund is particularly susceptible to those rate hikes. She's also criticized passive investing. And she has criticized using traditional benchmarks for investing. And she even continues to snap up shares of some of the beaten down tech stocks in her portfolio, even in times of declines. Some strategists have said that her conviction is the reason that she's been able to keep so many investors on board. But Morningstar said that Wood's reliance on her instincts is a liability, that her approach is perilous and that investors could be susceptible to more declines. Guys. JULIE HYMAN: Alexandra, thank you so much. We're going to keep an eye on Ark, obviously, which is very popular with investors and still has gotten some inflows, even as it has gone down. Appreciate it.