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Investors heeding a “buy the dip” rallying cry poured money into the fund in each of the first five months of the year — a net $1.89bn — as markets tumbled. Since then, their enthusiasm has waned. They pulled money in three of the next six months, or a net $76.5m, according to FactSet. On 30 November alone, they yanked $146m, which was among the largest single-day outflows of the year.

Investors have bailed out of growth stocks and other speculative assets en masse this year. In a rising yield environment in which they suddenly have options for earning returns with little risk, many are losing their appetite for money-losing companies promising the chance of returns in the future.

The three largest holdings in the fund — which is known by its ticker symbol ARKK — are Zoom, Tesla and Exact Sciences, companies Wood has said have the potential to change the world.

Shares of Zoom and Tesla have lost about half their value this year, while Exact Sciences, an unprofitable provider of cancer screening and diagnostics tools, is down 42%. Wood has also been a proponent of bitcoin, which has fallen about 75% from its November 2021 peak.

Similar bets netted huge rewards in the low-rate environment of 2020 and 2021. ARKK shares more than doubled in 2020 before worries about inflation — and the prospect of higher rates — stalled their advance.

“The bet was that free money would last indefinitely, and there doesn’t seem to have been a risk-management game plan,” said Jon Burckett St Laurent, senior portfolio manager at Exencial Wealth Advisors.

READ Equity fund outflows top £6.6bn in record UK investor exodus

For her part, Wood continues to shrug off the critics and stand by her investments. She tweeted recently that companies in her fund are “sacrificing short-term profitability for exponential and highly profitable long term growth”. During a Bloomberg Television interview in November, she predicted the price of bitcoin will hit $1m by 2030, a roughly 6,000% increase from current levels.

Wood has called for Zoom, ARKK’s largest holding, to approach $1,500 a share in 2026, based in part on expectations of a worker backlash against returning to offices. Her bear case is for shares to trade at $700. They closed 12 December at $73.69.

Through a spokeswoman, Wood declined to comment.

While many on Wall Street are cutting risk and bracing for a recession, Wood has been adding to riskier positions in recent weeks, buying more shares of cryptocurrency exchange Coinbase and a bitcoin futures ETF.

ARKK added 931,000 shares of Coinbase worth roughly $43m in November, according to FactSet. ARKK is the second-largest holder of Coinbase shares, which are down 83% year-to-date. Another of Wood’s funds, the ARK Next Generation Internet ETF, increased its exposure to bitcoin with the purchase of 608,000 shares of the Grayscale Bitcoin Trust, worth $6m. GBTC trust shares are down 76% this year.

Some investors say Wood’s fund still doesn’t look cheap, even after its sharp share-price declines. Since a majority of the companies it holds are unprofitable, traditional valuation measures such as price-to-earnings ratios are irrelevant.

“I think with the flows into Cathie’s fund, there’s a knee-jerk reaction from some investors when something’s down that much,” said Bill Callahan, investment strategist at Schroders. “But that’s not always the right play. All of these stocks work in a relatively low nominal growth, low rate environment. It just doesn’t seem like that’s where we’re going to be.”

Data from popular retail brokerage Webull Financial shows that customers have added cash on a net basis to ARKK this year, but the number of accounts holding the fund is shrinking.

Since 1 January, the number of accounts holding the fund is down 8%, Webull chief executive Anthony Denier said. By mid-November, the total had fallen to the lowest level of the year.

“The big change started happening in July,” Denier said. “It’s been steadily declining.”

ARKK could see another hit come in the coming weeks, Denier said, if savvy individual investors target their holdings for what is known as tax-loss harvesting — selling losing positions before year-end to realise losses and write them off as a tax loss.

Wood continues to try to sell investors on the future, but with returns plunging, more of them have questions.

“With Cathie Wood’s model, there’s no question that if one of her companies cures cancer, that stock will go through the roof,” said Brian Mulberry, client portfolio manager at Zacks Investment Management. “It is just simply a question of, how do you get from here to the other side of the rainbow?”

Write to Jack Pitcher at jack.pitcher@wsj.com

This article was published by The Wall Street Journal, a fellow Dow Jones Group brand