July 10 (Reuters) - Cathie Wood, founder and CEO of ARK

Investment Management, defended the strategy of the firm's

money-losing flagship fund, telling investors in a letter

released late on Wednesday that its fortunes will reverse when

interest rates fall.

The ARK Innovation ETF fund has taken investors on

a rollercoaster ride in recent years. After a 67.6% gain in

2023, the ETF is down more than 12% so far this year. That

compares to a gain of 16.9% for the S&P 500 index so far

in 2024, closing above 5,600 for the first time Wednesday.

ARK's ETF, meanwhile, has seen net outflows of more than

$1.8 billion in the last six months, according to data from

VettaFi.

In a letter posted on ARK's website, Wood wrote she fully

acknowledged "the macro environment and some stock picks have

challenged our recent performance." Nonetheless, she added, "our

conviction in and commitment to investing in disruptive

innovation have not wavered."

ARK's top investments as of May 31 were Tesla,

Coinbase and Roku ( ROKU ), according to LSEG data.

Wood argued many of the fund's holdings were now in "rare,

deep value territory" and poised to benefit disproportionately

once interest rate cuts begin. She anticipated another

blockbuster period for returns that would resemble the fund's

152.8% gains during the initial stages of the coronavirus

pandemic.

"Exiting our strategies now would crystallize losses that

lower interest rates and reversions to the mean should transform

into meaningful profits during the next few years," Wood wrote.

"We are resolute!"

ARK did not respond immediately to a request for further

comment on the letter.

Morningstar, the Chicago-based investment analysis company,

earlier this year calculated that ARK's losses had destroyed

$14.3 billion in shareholder value in the 10 years ended

December 31, 2023. ARK and Wood did not respond to requests for

comment on that report.

Wood believes a key to future returns will lie in artificial

intelligence-related investments - but not necessarily in market

darling Nvidia ( NVDA ) and other megacaps.

In the letter, she said she expected to see "a more diverse

set of winners to which the current equity market concentration

should give way."