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Cathie Wood Cuts Tesla Holdings as Ark Innovation ETF Slips, While Market Volatility Continues to Test Tech-Focused Funds
When Tesla’s shares fell 6.2 % last month, Ark Investment Management’s chief executive, Cathie Wood, decided to trim her holdings in the electric‑vehicle maker.
The decision comes on the back of a broader slide in Ark’s flagship ETF, the ARK Innovation Fund (ARKK), which has slipped 2.85 % in 2026. By contrast, the S&P 500 has risen 8.56 % over the same period.
ARKK’s performance has been a rollercoaster. In 2025 the fund posted a 35.5 % return, outpacing the S&P 500’s 17.9 % gain. Yet, its five‑year annualized return, as of June 12, sits at –8.06 %, compared with an 11.84 % return for the S&P 500, according to Morningstar data. The volatility that rewarded investors in bull markets has also produced sharp losses; in 2022 ARKK fell more than 60 %.
Wood’s investment thesis centers on high‑growth technology companies—artificial intelligence, blockchain, biomedical technology, and robotics. The sector’s inherent volatility has caused frequent swings in the fund’s value. Morningstar analyst Bella Albrecht noted that in the first quarter of 2026 two of Wood’s funds were among the worst performers: the Ark Next Generation Internet ETF (ARKW) ranked second and ARKK ranked fifth.
A March 2025 Morningstar analysis by Amy Arnott found that from 2014 to 2024 ARKK destroyed $7 billion of investor wealth, making it the third‑largest wealth destroyer among mutual funds and ETFs in Arnott’s ranking. The ranking has not been updated since.
Wood has spoken publicly about macro‑economic factors that could influence the fund’s trajectory. On the June 5 episode of the podcast “In the Know,” she said she is watching the June 17 Federal Reserve meeting, when new Chair Kevin Warsh will announce the next interest‑rate decision. Wood believes Warsh will lower rates if inflation eases and productivity rises, and that lower mortgage rates could support the technology sector.
Wood also highlighted that oil prices appear to be peaking and could decline further if the conflict in Iran resolves. She added that some companies are beginning to cut prices, which she sees as a sign that inflationary pressures may ease.
Tesla’s decline has prompted a reassessment of the company’s role in Ark’s portfolio. The stock’s recent performance has been a reminder that even high‑conviction holdings can move against a fund’s overall strategy.
The broader market context shows that while the S&P 500 has gained, technology‑heavy funds like ARKK and ARKW have struggled. The contrast illustrates the differing risk profiles of diversified market indices versus actively managed, sector‑focused ETFs.
Investors in Ark’s funds are watching both the Fed’s policy path and the performance of individual holdings such as Tesla. The fund’s recent losses and the broader volatility in the technology sector suggest that Ark’s strategy will continue to be tested in the current market environment.
For Ark investors, the next few months will be critical. The Fed’s June decision, potential changes in oil prices, and the continued performance of high‑growth technology stocks will shape the fund’s trajectory. As of now, ARKK remains below its 2025 peak, and its five‑year performance lags the S&P 500, underscoring the challenges of managing a high‑volatility, high‑growth portfolio.
The decision comes on the back of a broader slide in Ark’s flagship ETF, the ARK Innovation Fund (ARKK), which has slipped 2.85 % in 2026. By contrast, the S&P 500 has risen 8.56 % over the same period.
ARKK’s performance has been a rollercoaster. In 2025 the fund posted a 35.5 % return, outpacing the S&P 500’s 17.9 % gain. Yet, its five‑year annualized return, as of June 12, sits at –8.06 %, compared with an 11.84 % return for the S&P 500, according to Morningstar data. The volatility that rewarded investors in bull markets has also produced sharp losses; in 2022 ARKK fell more than 60 %.
Wood’s investment thesis centers on high‑growth technology companies—artificial intelligence, blockchain, biomedical technology, and robotics. The sector’s inherent volatility has caused frequent swings in the fund’s value. Morningstar analyst Bella Albrecht noted that in the first quarter of 2026 two of Wood’s funds were among the worst performers: the Ark Next Generation Internet ETF (ARKW) ranked second and ARKK ranked fifth.
A March 2025 Morningstar analysis by Amy Arnott found that from 2014 to 2024 ARKK destroyed $7 billion of investor wealth, making it the third‑largest wealth destroyer among mutual funds and ETFs in Arnott’s ranking. The ranking has not been updated since.
Wood has spoken publicly about macro‑economic factors that could influence the fund’s trajectory. On the June 5 episode of the podcast “In the Know,” she said she is watching the June 17 Federal Reserve meeting, when new Chair Kevin Warsh will announce the next interest‑rate decision. Wood believes Warsh will lower rates if inflation eases and productivity rises, and that lower mortgage rates could support the technology sector.
Wood also highlighted that oil prices appear to be peaking and could decline further if the conflict in Iran resolves. She added that some companies are beginning to cut prices, which she sees as a sign that inflationary pressures may ease.
Tesla’s decline has prompted a reassessment of the company’s role in Ark’s portfolio. The stock’s recent performance has been a reminder that even high‑conviction holdings can move against a fund’s overall strategy.
The broader market context shows that while the S&P 500 has gained, technology‑heavy funds like ARKK and ARKW have struggled. The contrast illustrates the differing risk profiles of diversified market indices versus actively managed, sector‑focused ETFs.
Investors in Ark’s funds are watching both the Fed’s policy path and the performance of individual holdings such as Tesla. The fund’s recent losses and the broader volatility in the technology sector suggest that Ark’s strategy will continue to be tested in the current market environment.
For Ark investors, the next few months will be critical. The Fed’s June decision, potential changes in oil prices, and the continued performance of high‑growth technology stocks will shape the fund’s trajectory. As of now, ARKK remains below its 2025 peak, and its five‑year performance lags the S&P 500, underscoring the challenges of managing a high‑volatility, high‑growth portfolio.
