Cathie Wood's Ark Invest Grew Its Portfolio to $15.4 Billion Last Quarter, With Tesla, AMD, and a New SpaceX Stake Making Up About 18% of ARKK Assets. Is Her Concentrated Bet Paying Off?

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Key takeaways

Cathie Wood's Ark Invest portfolio reached $15.4 billion in assets under management.
Tesla, AMD, and SpaceX make up about 18% of the ARKK fund's assets.
The ARKK fund has underperformed the S&P 500 and the Vanguard Information Technology ETF over recent years.

Portfolio growth and top holdings

Cathie Wood is one of America's most-watched tech investors, known for her extreme bullishness on Bitcoin and disruptive future technologies like robotics and artificial intelligence. According to her company's most recent 13F SEC filing, as of the second quarter, Cathie Wood's Ark Invest portfolio had a total of $15.4 billion of assets under management.

Her firm's flagship exchange-traded fund, the Ark Innovation ETF, is making some rather top-heavy bets on just a few tech companies. As of Oct. 19, a significant weighting of the ARKK fund's total assets was invested in just these three stocks: Advanced Micro Devices, Space Exploration Technologies, and Tesla.

Concentration in Elon Musk companies and AMD

About 1.75% of the ARKK fund assets are in Advanced Micro Devices, a semiconductor stock that is helping to power the AI data center boom. Another roughly 6.4% is in SpaceX, and an even larger 9.7% is invested in Tesla, meaning a total of 16.2% of this tech ETF's funds are in Elon Musk's companies. Add in AMD, and you have about 18% of ARKK's total weighting.

If you agree with Wood's investing approach, and you're optimistic about AI data centers and Musk's leadership in rocket technologies, electric vehicles, and the future of self-driving cars and robotics, then putting 18% of your money into those three stocks might seem like a good bet. Making concentrated investments can be a worthwhile strategy for delivering outsize gains.

Historical performance comparison

But history shows that Wood's ARKK doesn't always beat the market and can sometimes be disappointing for investors. The Ark Innovation ETF has delivered annualized returns of about 14.3% since its inception in October 2014.

That return has failed to outperform the S&P 500 after accounting for the actively managed ARKK fund's expense ratio of 0.75%. And ARKK has lost money for the past five years, with negative annualized returns of -4.06%.

Alternative tech ETF options

If you feel like Wood's investment approach is overly optimistic about unproven technologies, or you don't want to make such a highly concentrated bet on one volatile semiconductor stock and Musk, the Vanguard Information Technology ETF might be a better buy for long-term investors. This low-cost index fund has delivered average annual returns of 20.9% for the past five years, far better than ARKK.

The VGT fund's portfolio includes 318 tech stocks. Advanced Micro Devices is one of the top 10 stock holdings in VGT, at 3.67% of the fund's assets. VGT does not hold Tesla or SpaceX stock because those companies are in sectors that VGT excludes under its benchmark's definition of technology companies. And VGT charges an expense ratio of only 0.09%.

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