Cathie Wood’s Fintech ETF Shakes Off Sector Lag, Soaring on Unconventional AI Bets
The year 2025 proved to be a powerful comeback story for disruptive technology funds, but one in particular managed to defy the gloom hanging over the traditional payments sector. Cathie Wood’s ARK Blockchain & Fintech Innovation ETF, ticker ARKF, delivered an outstanding performance, posting a return of approximately 29% for the year.
This gain significantly outpaced major benchmarks, including the S&P 500, which rose by just over 16%, and the tech-heavy Nasdaq, which gained about 20% during the same period. More importantly, ARKF’s success provided a clear victory for its manager’s high-conviction, future-forward investment philosophy, especially in an environment where many classic financial technology companies struggled.
The Secret Ingredient: AI, Not Just Finance
How did a fund specializing in financial technology manage to achieve such a stellar return? The answer lies in Cathie Wood’s unconventional definition of “fintech.” The fund’s success did not come from a resurgence in traditional digital payment or banking stocks, which reportedly lagged the broader rally. Instead, the heavy lifting was done by companies that stretch the boundaries of the financial world, particularly those at the forefront of the artificial intelligence revolution.
Key holdings like the data analytics firm Palantir Technologies were instrumental, delivering a staggering return of approximately 135% in 2025. Similarly, the streaming media platform Roku also saw strong momentum, with its stock gaining about 46%. While these companies aren’t traditional financial institutions, their core technology—whether it’s Palantir’s AI-driven data systems being adopted by financial firms or Roku’s payments and advertising ecosystem—positions them firmly within ARK’s broader theme of disruptive innovation impacting finance.
A Strategic Rotation in Action
The stellar performance underscores a strategic portfolio shift that ARK Invest made throughout the year. The firm’s managers weren’t afraid to rotate out of some established fintech and metaverse exposure—including notable names like Robinhood and Roblox—and instead double down on high-growth areas. This rotation saw them bolster positions in AI-driven healthcare and therapeutics, as well as digital asset infrastructure, signaling a continued strong conviction in the intertwined futures of AI and the digital economy.
For investors, ARKF’s 2025 showing serves as a powerful reminder that disruptive innovation does not adhere to strict sector lines. The fund’s ability to locate companies utilizing cutting-edge technologies like AI and blockchain, even if they operate on the periphery of the financial services industry, allowed it to post results that few expected at the start of the year. While the broader ARKF portfolio is still exposed to volatility, its aggressive, forward-looking stance on AI proved to be the winning bet that pulled the fund decisively ahead of the pack. The message for the years ahead appears to be clear: the future of finance is inextricably linked to the future of artificial intelligence.