Cathie Wood's $9 billion flagship Ark fund cut all exposure to China after Beijing started cracking down on Jack Ma

• Tech investor Cathie Wood's flagship Ark Innovation ETF now has zero exposure to China assets.
• Wood said on Thursday the fund started paring its stake in China following Beijing's tech crackdown.

China's crackdown on Alibaba spooked tech investor Cathie Wood so much that she slashed the China exposure of Ark Invest's flagship fund down from a significant percentage in 2020 to zero now.

"We saw the trouble that Alibaba, Alipay got into — Jack Ma specifically, and we began to wonder 'Oh no, is this a broad-based crackdown by the government on any company or person with too much power?' And that's exactly what it was, as it turns out, in hindsight," Wood, Ark's CEO and CIO, said in a webinar on Thursday.

Ma angered Chinese authorities after giving a speech in October 2020 in which he criticized China's financial regulatory system and claimed Chinese banks were operating with a "pawnshop" mentality. His words prompted intense regulatory scrutiny of his businesses — including Alibaba and fintech firm Ant — and a broader crackdown on tech firms in China.

Wood said the Ark had invested in China particularly as it was impressed with the country's "restraint" during the pandemic.

"They were not throwing money at the problem. They were very disciplined in terms of their monetary and fiscal policy responses," said Wood. Ark Innovation ETF, the flagship fund, neared a 25% exposure to China and other emerging markets — with stakes in tech giants Alibaba and Tencent, among others.

But the fund's exposure to China is now down to zero after fund managers pared its stakes down steadily. The fund has nearly $9 billion in assets under management, per Morningstar, a financial services firm.

Wood also said on Thursday she was concerned about the country's real-estate crisis.

She said China's economy — which has been throwing up one red flag after another — has been a "big disappointment" since it ended its COVID-zero policy following nearly 15 years of double-digit real GDP growth.

"Growth like that can cover a lot of sins and those sins usually involve debt importantly in the property space, and so we do believe that China is facing its day of reckoning in this regard," she said.

The Ark Innovation ETF closed 0.4% higher at $47.93 on Friday. It is up 54% so far this year.