This article previously appeared at The HumbleDollar
THE S&P 500 IS DOWN 10% so far this year—but the pain hasn’t been dished out evenly. Value and steady dividend-paying stocks are about flat for 2022, while technology companies and speculative small-cap stocks have suffered mightily. Money has fled the market’s unprofitable glamor companies and flocked to old-fashioned cash flow generators.
Just how bad has the drubbing been among formerly hot growth names? Look no further than Cathie Wood’s (NYSE:ARK Innovation ETF) (symbol: ARKK). Over the past year, this actively managed exchange-traded fund (ETF) is down a whopping 57%.
The losses piled up starting early November 2021—arguably the peak for growth stocks and small-cap shares. ARK Innovation ETF fell more than 20% during 2021’s final two months.
After that significant late-year dip, the fund has slumped another 45% this year, bringing its total drawdown to 67% since the fund’s all-time high notched in February 2021. Given the way investment compounding works, the fund must now soar some 200% just to get back to even.
The growth-stock part of the stock market is clearly in a bear market. Just how bad have some of the drops been among ARK Innovation’s biggest holdings? Brace yourself.
Morningstar is my favorite site for analyzing ETFs. I like to see what’s under the hood of popular funds. According to the Apr. 21 snapshot, Tesla (NASDAQ:TSLA) is ARK Innovation’s biggest position, with a nearly 11% weighting. The stock has performed spectacularly over the past year, up 40%. But among the fund’s largest holdings, that’s the only happy story.
Zoom Video (NASDAQ:ZM) is the second-biggest holding. That work-from-home story stock has fallen 69% over the past 12 months. Roku (NASDAQ:ROKU), ARK’s third-largest position, is down 72% from a year ago, while its fourth-largest holding—Teladoc Health (NYSE:TDOC)—is off 68%.
All these stocks were among the fund’s top 10 holdings a year ago. I could go on—or you can check out the dreadful performances for yourself. After such a rough stretch, the fund’s assets under management fell below $10 billion after peaking near $28 billion 14 months ago. But here’s perhaps the biggest surprise: Money has continued to pour into the ARK Innovation ETF.
This is not intended to be another hit piece on Wood’s flagship fund. Rather, it illustrates the old cliché—that it isn’t a stock market, but a market of stocks.
Even as the broad U.S. market has held its own over the past year, many once-sexy stocks have been tossed into the dumpster.