Many focus on Tesla (NASDAQ:TSLA) and its recent drops. However, there’s another property closely tied to it. Specifically, Cathie Wood’s ARKK (NYSEARCA:ARKK) Innovation Fund. The fund bought heavily into Tesla over the years, and now, it’s taking substantial flak as it faces its lowest price in the last five years.
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ARKK’s substantial investment in Tesla—which itself has seen substantial declines and some of its lowest points—was the biggest reason behind the drop. However, it was far from the only reason. Further damaging the ARKK Innovation Fund was a macroeconomic environment that left investors soured on risk.
Additionally, the aggressive tightening policy at the Federal Reserve—a sentiment echoed throughout numerous central banks—hurt speculative assets, the kind frequently seen in ARKK. While Tesla’s decline is actively hitting the fund hard, that’s not stopping Cathie Wood from buying in. Reports note that Wood is still actively buying Tesla shares despite the losses seen so far.
It’s been a terrible year so far for the fund; the best performer in the entire fund posted a loss of 24% against this time last year. ARKK has lost close to two-thirds of its value on a year-to-date basis. Now that it’s at a five-year low—lower even than the COVID-19 selloff seen back in March 2020—the risk does seem larger than normal.
