Investor confidence in Cathie Wood’s ARK ETFs seems to be waning as escalating outflows and a steep decline in asset values mark a challenging period for the famed investment manager. This year alone, the ARK funds have experienced a net outflow of $2.2 billion, a significant increase from the $760 million seen throughout 2023.

Currently, the combined assets under management for ARK ETFs are down to $11.1 billion, a stark reduction of 81% from their 2021 peak of $59 billion. This drop aligns with a tough three-year stretch for Wood’s strategy of betting on disruptive innovation, with her flagship ARK Innovation ETF plummeting 72% from its high in February 2021.

Among the factors contributing to this downturn is the significant drop in Tesla’s shares, a major holding in the ARK Innovation ETF, which has declined over 40% year-to-date. This decline has pushed the ETF down 16% this year, even as the broader market shows positive returns.

This disconnect between ARK funds’ performance and the overall bullish stock market was emphasized by a Morningstar analysis earlier this year. Morningstar reported that ARK ETFs have eroded approximately $14 billion in investor wealth over the past decade, noting that the bulk of investment occurred near the funds’ peak values. “These funds managed to lose value for shareholders even during a generally bullish market,” noted Morningstar analyst Amy Arnott.

Compounding the pain for ARK investors is the fund’s absence from the lucrative artificial intelligence sector, highlighted by Wood’s decision to sell off most of her Nvidia holdings just before the stock’s significant rally in late 2022.

Furthermore, other major investments like Roku and Unity Software have each tumbled over 30% this year, while Zoom Video’s shares have dropped 16%.

Despite these setbacks, Cathie Wood remains optimistic about the future, particularly with Tesla, which she believes could reach $2,000 per share within the next five years. However, as ARK continues to navigate through these turbulent times, investor sentiment seems increasingly cautious, reflecting a broader reconsideration of Wood’s high-stakes investment philosophy.