By Lewis Krauskopf

NEW YORK (Reuters) – Struggles are mounting for the flagship fund of star stock picker Cathie Wood’s ARK Invest, as investors favor stocks that can benefit from rising economic growth and rising bond yields threaten the appeal of technology shares.

The ARK Innovation ETF, which had $25.5 billion in assets at the end of June, was down 4.2% on Tuesday, outpacing a 1.9% drop for the benchmark and a 2.6% fall for the tech-heavy Nasdaq.

Wood’s fund, which was the best-performing U.S. equity fund in 2020, is down more than 9% so far this year, while the S&P 500 has gained 16%. Morningstar’s 601 midcap growth funds track the ARKK, and this fund is in the lowest percentageile.

The high-growth names that helped Wood reap outsized gains during last year’s coronavirus lockdowns have hurt the fund’s performance in 2021, with so-called stay-at-home stocks such as Teledoc Health and Roku (NASDAQ:) losing their luster as investors have turned to financials, energy companies and other economic reopening plays at various times over the last few months.

“What worked for the fund in 2020 has not persisted even if the long-term trends favored by ARK remain relevant,” Todd Rosenbluth, head of ETF & mutual fund research at CFRA, said in an emailed comment.

Some have also interpreted a hawkish tilt from the Federal Reserve’s meeting last week as a vote of confidence for the U.S. economy, buoying reopening stocks and boosting Treasury yields.

Although rising bond yields may reduce stock’s relative attractiveness, it can also impact tech and other growth stocks whose valuations depend on future cash flow, which is discounted more as bond yields increase.

The yield on Wednesday’s 10-year U.S. Treasury Note has risen 23 basis points, to 1.53%. While the ARKK ETF fell over 4%,

Wood stated that slowing down the United States’ economic activity will help to boost growth stocks earlier this month.

Tuesday’s request to ARK Invest for comments was not answered immediately.

According to Ihor Dusesky, S3 Partners’ managing director for predictive analytics, short interest is currently at 21.41M shares. This represents 11.9% of the float. Short interest has declined by 1.1% over the last week, as shorts have covered the bets.

The fund’s top holdings include electric carmaker Tesla (NASDAQ:) Inc as well as virtual health company Teladoc (NYSE:) and television streaming firm Roku. Tesla shares rose 10% to 2021 while Roku’s stock has fallen 6%, and Teledoc has dropped 35%.

China’s crackdown on bitcoin trading caused another setback to the fund. It lists Coinbase (NASDAQ.) Global Inc as its fifth largest holding.

Since its inception in 2014, the ARKK fund is up about 450% against a roughly 115% gain for the S&P 500, and ranks in the top percentile in its category of funds tracked by Morningstar over a five-year period.