The "Wooden Sister" of legend, the ARKK fund, has risen more than 50% this year, with a return as high as 152.5% in 2020! However, if you had invested in this fund, the return over the past five years would have been zero! Morningstar also gave it a "below average" rating.

"We estimate that the returns for investors are much worse—they not only did not enjoy positive returns, but their asset-weighted return rate is sharply negative."

So, what is the overall return rate of Sister Wood?

15.1% —— This is the annualized return rate since its establishment in 2014, surpassing the S&P 500 during the same period, looking good.

This number is the Time-Weighted Rate of Return (TWRR). It assumes that you invested money on the first day the fund was established and have held it until today.

However, there is an even more critical concept: Money-Weighted Rate of Return (MWRR), which records the actual buy and sell points and amounts of each investor.

This is the true indicator that determines how much money you actually earn.

In 2017, ARKK achieved an astonishing return of 87.4%. However, at that time the fund size was only $116 million.

In 2020, a return of 152.5% made Cathie Wood the spokesperson for "disruptive innovation," and the crowd surged in.

In 2020-2021, $29.2 billion of "hot money" flowed in. By February 2021, the asset size reached $27.9 billion.

However, at the peak moment, the music stopped - a 23.4% drop in 2021 and a 67% drop in 2022. The ARKK fund alone lost 7.1 billion dollars.

In short, when making a lot of money, the capital is low, and when losing a lot of money, the hot money is high.

Some people say: "But Wood姐 is back!" Indeed, it has risen 67.82% in 2023, 8.36% in 2024, and 51.41% so far in 2025.

The annualized return over 5 years is still -0.87%.

Why is there still a loss despite such a big rebound? It's simple:

1. In 2022, 67% of the crash occurred on a huge base of $27.9 billion.
2. In 2023, 67.8% of the rebound occurred on a base that had significantly shrunk.

Besides the asymmetry between rise and fall, it is also related to the fact that funds "flow in during a rise and flow out during a fall."

As a result, the absolute loss of funds far exceeds the absolute recovery of funds.

Even by November 2025, its fund size will be less than 30% of the peak.

Moreover, the influx of investors itself is destroying this strategy.

A small fund of 100 million dollars is very flexible, while a giant of 27.9 billion dollars is much harder to manage.

Interestingly, after ARKK rose by 51.4% this year, another $3.7 billion flowed into Cathie Wood's funds within a week.

Shaw said: "What we learn from history is that people never learn anything from history."

Please remember that Time-Weighted Rate of Return (TWRR) is the hallmark of fund managers, while Money-Weighted Rate of Return (MWRR) is the money you've actually made.