Cathie Wood’s ARK Innovation ETF (ARKK) has experienced a tumultuous year, marked by substantial outflows and underperformance compared to broader market indices. The fund, once a high-flyer, has seen its assets under management dwindle and its share price plummet significantly from its peak in early 2021.

Despite these setbacks, Wood remains steadfast in her commitment to investing in disruptive innovation. She acknowledges the recent challenges faced by ARKK but argues that the current market environment presents unique opportunities in undervalued stocks. Drawing parallels to Amazon’s early struggles, Wood believes that staying the course will ultimately reward patient investors.

Wood defends ARKK’s minimal exposure to the “Magnificent Six” tech giants, emphasizing the importance of diversified exposure to emerging technologies like artificial intelligence (AI). She also points to ARKK’s impressive 68% gain in 2023 as evidence that the strategy can outperform when market conditions align with her vision.

The current challenges faced by ARKK stand in stark contrast to Wood’s previous status as an investing sensation. However, Wood remains resolute in her belief that ARKK’s approach, which focuses on disruptive innovation and long-term growth potential, will ultimately prove successful.

In her letter to investors, Wood highlights ARKK’s low valuation metrics compared to broad market indices, suggesting that the fund has entered “deep value territory.” She further argues that if inflation and interest rates surprise on the low side of expectations, it could disproportionately benefit equities focused on disruptive innovation.

While the road ahead may be uncertain, Wood remains confident in her investment strategy and encourages investors to stay the course. She believes that ARKK’s differentiated exposure to innovation and focus on long-term growth will ultimately reward those who remain patient and committed to the fund’s vision.