Investors are shorting Cathie Wood's ARK Innovation ETF at the highest level ever

• Short sellers have placed $2.7 billion in bets against Wood's flagship ETF, according to S3 Partners data cited by the Financial Times.
• In a sign of the growing desire to bet against Wood's fund, Tuttle Capital Management has filed for an inverse ARK ETF that will replicate the opposite of its performance.
• After a brutal start to the year, short sellers on ARKK are now positive for the year, up 7.8%.

More investors than ever before are taking out short positions against Cathie Wood's ARK Innovation ETF, as the thematic tech investing popularized by Wood starts to show cracks, according to a new report by the Financial Times.

Short interest as a fraction of float has broken above 12%, with over $2.7 billion in bets against Wood's flagship ETF, called ARKK, according to S3 Partners data cited by the FT.

The peak in short bets, which have risen steadily since January, has coincided with record outflows from the ETF in July, as some investors begin to suspect tech stocks are out of running room.

"Some investors believe there is no further upside in the tech sector as it is expensive, may be in bubble territory, and other parts of the US economy are likely to do better as the world reopens," Debbie Fuhr, founder of consultancy ETFGi told the FT.

In a sign of the growing desire to bet against Wood's fund, Tuttle Capital Management has filed for an inverse ARK ETF that will replicate the opposite of its performance.

Earlier in 2021, shorting ARKK generated millions in losses for bearish traders, Ihor Dusaniwsky, head of analytics at S3 Partners, told the FT. But as ARKK's performance worsens, short sellers are now positive for the year, up 7.8%.

Year-to-date, ARKK has grown 0.7%, versus 19.8% for a standard S&P 500 ETF.