Cathie Wood's flagship fund is largely missing out on a booming tech-fueled bull run

By Christine Idzelis

The flagship ARK Innovation ETF has seen only tepid gains since the start of the year as the AI trade soars

Cathie Wood’s flagship ETF is missing out on big tech-driven gains in 2026.

ARK Invest CEO Cathie Wood’s flagship exchange-traded fund actively invests in shares of companies expected to be disruptive and innovative. But so far this year, the fund appears to be missing out on big gains tied to technology and artificial intelligence.

A tech-driven bull market has sent shares of semiconductor companies and other firms tied to the massive AI buildout – including industrial names like Caterpillar (CAT)- soaring. The PHLX Semiconductor Index SOX was up around 70% year to date on Wednesday afternoon, as was an ETF that aims to track it SOXQ.

That follows three strong years of returns for the U.S. stock market. And now, a swift comeback from a March selloff related to the Iran war has the S&P 500 SPX up 8.7% in 2026 as of Wednesday afternoon, while the Invesco QQQ Trust Series I QQQ, an ETF that tracks the Nasdaq-100 index NDX, has jumped more than 16% this year.

By comparison, shares of the ARK Innovation ETF ARKK were up a relatively paltry 1.7% in 2026 through Tuesday, lagging far behind the more than 40% surge of the actively managed iShares A.I. Innovation and Tech Active ETF BAI over the same period, according to FactSet data.

The ARK Innovation ETF has dramatically lagged the Nasdaq 100 since the end of 2019 and since the fund’s launch on Halloween in 2014, FactSet data showed. The ETF has climbed 56.3% since the end of 2019 through Tuesday, compared with an increase of almost 233% for shares of the QQQ ETF that tracks the Nasdaq 100 index.

Since its launch, the ARK Innovation ETF has gained almost 284%, trailing the 599% climb for the QQQ ETF over the same period. It became a darling of the stock market in 2020, in the midst of the COVID-19 pandemic, surging almost 149% that year, FactSet data showed. Tesla was the fund’s top holding at the end of 2020, according to Dow Jones Market Data.

But the ARK Innovation ETF has struggled to replicate its huge return of that year.

While the U.S. stock market has benefited from excitement over artificial intelligence, investors this year have pulled capital from the ARK Innovation ETF on a net basis through Tuesday, FactSet data showed. The fund’s assets under management are far below their 2021 peak.

The ETF has seen about $251 million in net outflows this year through Tuesday, according to FactSet data. That’s after a particularly large outflow of nearly $2.9 billion on April 28.

The ETF’s “popularity has gone down over the last few years because it has not delivered the level of performance that it did in the past,” Todd Rosenbluth, head of research at TMX VettaFi, said in a phone interview. While disruptive innovation has become more popular with investors amid the AI boom, he said the fund has “missed out on some of the winners.”

The ETF’s one-star rating from Morningstar speaks to its “performance challenges,” according to Rosenbluth.

ARK Investment Management, which was founded by Wood, did not immediately provide comment on the fund. Wood is the portfolio manager of the ARK Innovation ETF.

The fund’s biggest holding on Tuesday was Tesla (TSLA), whose shares ended the day down 3.6% on the year. Rounding out the ETF’s top five stocks were Advanced Micro Devices (AMD), Circle Internet Group (CRCL), Crispr Therapeutics (CRSP) and Tempus AI (TEM), data on Ark’s website showed. On Wednesday afternoon, a sharp rally in Tesla’s shares lifted the Big Tech stock into positive territory for 2026, if only slightly, FactSet data showed, at last check.

Over the years, a crop of so-called thematic ETFs, which offer investors exposure to popular themes like AI or space, have been vying for investors’ dollars.

“Investors are increasingly turning to thematic ETFs for growth opportunities,” Rosenbluth said. “I just don’t think they’ve been turning to ARKK” lately, he said, referring to the ticker for the ARK Innovation ETF.

Wood has remained a popular figure in the asset-management industry due to her views around disruptive innovation.

Although the ARK Innovation ETF rallied more than 35% in 2025, the fund this year has been trounced by the S&P 500’s information-technology sector.

The State Street Technology Select Sector SPDR ETF XLK, which tracks a modified version of the S&P 500’s tech sector, has rallied almost 22% in 2026 through Tuesday. As of Tuesday, the fund’s top five holdings were Nvidia (NVDA), Apple (AAPL), Microsoft (MSFT), Micron Technology (MU) and Broadcom (AVGO).

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“Tech writ large is now” 40% of global equity value, Nicholas Colas, co-founder of DataTrek Research, said in a note emailed Tuesday. “In a dramatic reversal of the long-run trend, hardware (not software) is ‘eating’ global market cap.”

The iShares A.I. Innovation and Tech Active ETF – which invests globally in AI and technology equities and has seen even stronger performance than the S&P 500’s tech sector this year – counted SK Hynix (KR:000660), Broadcom, Nvidia, Advanced Micro Devices and Micron Technology as its five largest weights on Monday.

Among other AI and tech ETFs, shares of the Roundhill Generative AI & Technology ETF CHAT have surged 42.9% this year through Tuesday, while the Global X Artificial Intelligence & Technology ETF AIQ has climbed 20% and the Dan Ives Wedbush AI Revolution ETF IVES has gained 13.8%, according to FactSet data.

Huge recent rallies in technology-related stocks have been met with worry in some cases.

“Bulls and bears will see what they want to see,” Jonathan Krinsky, chief market technician at BTIG, said in a note Tuesday. “Our view remains that we will see an equal and opposite reaction to the parabolic advance we have seen” over the last few weeks in tech, semiconductors and AI.

The U.S. stock market was trading mostly higher Wednesday afternoon, with the S&P 500 up 0.7%, the Dow Jones Industrial Average DJIA falling 0.2% and the Nasdaq rallying a sharp 1.3%. The S&P 500 was trading in record territory, according to FactSet data, at last check.

Wood’s firm offers other actively managed ETFs, including the ARK Autonomous Technology & Robotics ETF ARKQ, whose shares have climbed more than 19% this year as of Wednesday afternoon. The Ark Space & Defense Innovation ETF ARKX has seen a similar gain of more than 20% over the same period.

Those returns far exceeded the 2.6% rise so far in 2026 for the Ark Genomic Revolution ETF ARKG. The ARK Next Generation Internet ETF ARKW and Ark Blockchain & Fintech Innovation ETF ARKF were both down on the year as of Wednesday afternoon, FactSet data showed, at last check.

-Christine Idzelis

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05-13-26 1410ET

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