Why ARKK Stalled As QQQ Took Off: Harsh Lessons Over Past 5 Years

Core Viewpoint - ARK Innovation ETF (ARKK) has underperformed compared to Invesco QQQ Trust (QQQ) over the past five years, primarily due to its focus on volatile, disruptive technologies versus QQQ's investment in established tech giants [1][4]. Group 1: Performance Comparison - Over the past year, ARKK has achieved a return of only 10%, while QQQ has posted a return of 32.2% [4]. - Year-to-date, ARKK is down 10.2%, contrasting with QQQ's increase of 19.5% [4]. - In the last five years, ARKK has managed a mere 3.9% return, whereas QQQ has surged by 164% [4]. Group 2: Investment Strategy - ARKK's strategy focuses on "disruptive innovation," investing in companies like Tesla, Roku, and Coinbase, which promise to revolutionize their industries [2][3]. - In contrast, QQQ invests in established companies such as Apple, Microsoft, and Nvidia, which have shown resilience and consistent cash generation [3][4]. Group 3: Risk and Volatility - ARKK has a five-year beta of 1.84, indicating higher risk and volatility compared to QQQ's beta of 1.19 [5]. - The expense ratio for ARKK is 0.75%, significantly higher than QQQ's 0.20%, leading to higher costs for underperforming investments [5]. Group 4: Missed Predictions - ARKK's ambitious price predictions for stocks like Roku and Zoom have not materialized, with current prices significantly lower than projected [6]. - The fund's high-risk, high-reward strategy has led to significant challenges, raising doubts about achieving its predicted returns in the near future [7].