Cathie Wood's Ark Innovation fund drops 10% on week, wiping out all 2021 gains

Published Fri, Mar 5 202111:06 AM ESTUpdated Mon, Mar 8 202111:39 AM EST

Ark Invest's flagship fund, Ark Innovation, took a beating this week amid the sell-off in innovation names pressured by rising interest rates. Shares of the ETF are down more than 10% this week and, off more than 25% from its all-time high. The fund has wiped out all of its 2021 gains this week, down more than 6% for the year. Shares of Ark Innovation closed about 1% lower on Friday, well off the lows of the day. Staying the course, Wood took the tech wreck this week as an opportunity to buy the dip in some of her ETF's top holdings. Cathie Wood's "disruptive innovation" focused ETF has raked in close to $6 billion in flows this year, according to FactSet, after the fund returned nearly 150% in 2020. Despite the ETF's weak performance this week, the fund only saw outflows on Thursday, a vote of confidence in hot-handed Wood. Wood has said she expects interest rates to rise; however, the portfolio manager, still considers her fund's holdings as value names when considering how innovation will disrupt human life. "It's much less risky than we believe the benchmarks are," Wood said on the RazReport podcast on Wednesday. "Benchmarks are filing up with value traps because the innovation platforms...they are going to disrupt and disintermediate the traditional world order." CNBC Pro looked through Ark Invest's daily trading wraps and broke down how many shares Wood bought of her top holdings this week. Teladoc Health and Zoom Video Communications were Wood's big purchases this week. Dropping 14.2% and 9.7%, respectively, since Monday, the stay-at-home stocks faltered as the U.S. 10-year Treasury yield topped 1.61%. Ark purchased nearly 620,000 shares of Teladoc Health and more than 660,000 shares of Zoom Video. Based on their closing prices on Thursday, Wood's investments were to the tune of about $120 million in Teladoc and about $227 million in Zoom Video. Ark Innovation also scooped up shares of Square , Roku , Zillow and Shopify this week. It's no surprised Wood doubled down on her favorite names. The big-name investor said last week she wasn't worried about the recent weakness in innovation stocks and was even happy the bull market was broadening into different pockets of stocks. "I like the fear we have experienced, mostly because I don't think it will last," Wood said during a webinar last Friday. "I'm happy that there's a reality check in terms of the speculative moves that have taken place in the innovation space." Many of the ETF's holdings are companies whose profits are far off from being realized, so they are trading merely on valuation. When interest rates rise, those future profits look less valuable and those high-growth stocks can get hit the hardest. Ark Innovation also picked up shares of Unity Software , Beam Therapeutics, Berkley Lights , Fate Therapeutics , Exact Sciences and 10X Genomics . Wood also bought nearly 2 million shares of Palantir Technologies in ARKK, worth more than $46 million, based on the company's closing price on Wednesday when the shares were purchased. Notably, Ark Innovation didn't buy any shares of Tesla this week, despite a 15% drop; however, the ETF bought more than $120 million worth of Tesla last week. Tesla was off another 8% on Friday and is down 18% this year.

Cathie Wood, chief executive officer and chief investment officer of ARK Investment Management LLC, speaks during the Sooner Than You Think conference in the Brooklyn borough of New York on Tuesday, Oct. 16, 2018.

Alex Flynn | Bloomberg | Getty Images

Ark Invest's flagship fund, Ark Innovation, took a beating this week amid the sell-off in innovation names pressured by rising interest rates.

Shares of the ETF are down more than 10% this week and, off more than 25% from its all-time high. The fund has wiped out all of its 2021 gains this week, down more than 6% for the year.

Shares of Ark Innovation closed about 1% lower on Friday, well off the lows of the day.

Staying the course, Wood took the tech wreck this week as an opportunity to buy the dip in some of her ETF's top holdings.