What's Going On With Cathie Wood's ARK Innovation ETF (ARKK)?

The ARK Innovation ETF ARKK hit new five-year lows this week, led by declines in the top holdings of Ark's flagship fund, but ARKK is bouncing off the lows Wednesday morning. Founder and CEO Cathie Wood reaffirmed confidence in her strategy in a year-end letter to shareholders.

What Happened: Wood acknowledged that current market conditions have pushed investors out of innovation names over the last two years as some companies pull back on research and development in order to build cash as a buffer against rising rates. But she sees opportunity amid the wreckage. 

Wood noted that the last time cash levels were this high was in 2009 and 2001. 

"In hindsight, both of those times were terrific opportunities to put funds to work in highly differentiated ways. To the extent investors have reserves of cash to put to work, ARK believes that this time will be no different and that innovation strategies will be prime beneficiaries when equity markets recover," Wood wrote in a letter to shareholders.

ARK's flagship fund has faced significant selling pressure this year amid sharp declines in its top holdings including Tesla Inc TSLA, Zoom Video Communications Inc ZM and Roku Inc ROKU. 

Ark Innovation reported net inflows of just $13.11 million in November. As of last week, the fund had already seen net outflows of nearly $40 million this month. 

Check This Out: Are Growth Investors Finally Cutting Ties With Cathie Wood? Ark Innovation Flows Vanish As Flagship Fund Hits 5-Year Low

ARKK Price Action: ARKK has a 52-week high of $98.43 and a 52-week low of $29.43.

ARKK shares are up 1.44% at $30.21 at time of publication, according to Benzinga Pro.

Photo: courtesy of Tesla.