Cathie Wood's Ark Invest has destroyed an estimated $14.3 billion in wealth over the past decade, according to a recent Morningstar analysis.

Ark Invest was all the rage in 2020 and 2021, when its concentrated bets on highly speculative technology companies paid off in a big way thanks to low interest rates and a boom in risk appetite among retail investors. 

Ark's flagship innovation ETF, ARKK, soared nearly 150% in 2020, and that massive outperformance helped drive a surge of inflows into its funds right near its peak.

The firm attracted nearly $30 billion in assets in 2020 and 2021, which were then decimated during the 2022 bear market when its flagship fund plunged 67%. 

The ARKK ETF destroyed $7.1 billion in wealth, while its healthcare-focused ARK Genomic ETF destroyed $4.2 billion in wealth, according to Morningstar.

Across all fund families that have destroyed wealth over the past decade, Ark Invest topped the list — and its losses were more than double the next firm on the list.

What's striking is that Ark's massive wealth destruction occurred during a favorable time for the stock market.

"These funds managed to lose value for shareholders even during a generally bullish market," Morningstar analyst Amy Arnott said. 

The ARKK ETF has generated a total positive return of 121.8% since its inception in 2014, which is less than half the Nasdaq 100's gain of 329.5% over the same time period. Meanwhile, the ARKK ETF is still down 71% from its record high.

Despite the massive wealth destruction, ARK Invest as a business is doing just fine. The investment company still has more than $13 billion in assets across its suite of ETFs, signaling that not all investors have abandoned Wood's investment strategy. 

But in an investment world that is shifting to valuing profits over growth, it is unclear when Ark Invest's investment strategy might pay off again for investors.

The firm's top holdings currently include Coinbase, Tesla, Roku, and Zoom Video, all of which have had a rough start to 2024. 

"The biggest value destroyers in the fund industry illustrate that there's no guarantee of success, even during a generally favorable market environment. They also provide a valuable case study in how not to invest," Arnott said.

This story was originally published in February 2024.