(Bloomberg) — Cathie Wood’s ARK Blockchain & Fintech Innovation ETF delivered a standout 29% return in 2025, defying an industry downturn by stretching the definition of “financial technology.”

The inclusion of stocks such as artificial intelligence firm Palantir Technologies Inc., up 135% last year, and TV streaming platform Roku Inc., up 46%, helped buttress ARKF, while fintech’s core payment stocks lagged, Bitcoin ended the year down 7% and crypto exchange Coinbase Global Inc. fell 9%.

“It is a lot of different plays here and we’re balancing the portfolio, pulling on levers here against those technologies to each other,” said Dan White, associate portfolio manager at ARK Investment Management. “With Roku and Palantir, while they don’t look like traditional flavors of fintech, they certainly have an important role in the ecosystem.”

The success of ARK Investment Management’s fintech fund has meant becoming less of a pure-play bet on the industry to follow whichever parts of the market have been working. In a year when payments stocks dragged and crypto prices slid, the firm looked more toward technology companies whose fortunes were tied to AI. Funds that stretched their mandates to adapt to that trend outperformed, while those more tightly tied to payments and crypto struggled to keep pace.

The Global X FinTech ETF and Siren NexGen Economy ETF fell by single digits in 2025. Meanwhile, the Fidelity Crypto Industry and Digital Payments ETF, VanEck Digital Transformation ETF and iShares Blockchain and Tech ETF all managed double-digit gains.

Anticipation for booms across fintech and crypto was high after Donald Trump returned to the White House last January, establishing a more innovation-friendly administration. However, many of the biggest names in digital payments failed to perform for investors in 2025, and a cryptocurrency rout in October spurred a broader downturn.

“Crypto in general front-ran the narrative,” said Eric Balchunas, senior ETF analyst at Bloomberg Intelligence. He pointed to Bitcoin’s 123% gain in 2024. “You just can’t pull that off every year.”

Crypto-related companies that capitalized on the AI boom fared better. Crypto miners Hut 8 Corp. and Riot Platforms Inc. were up 124% and 24%, respectively, as some miners looked to repurpose the hardware they have on hand to cash in on the AI hype. The Fidelity, VanEck and iShares crypto ETFs all included miners.

On the digital payments side, Fiserv Inc. was down 67% for the year, following an October crash, while payments giants PayPal Holdings Inc., Block Inc. and Global Payments Inc. each lost roughly a quarter to a third of their value. Adyen NV and Toast Inc. were down by single digits. The divergence between the payments cohort and AI-linked stocks highlights a broader shift in markets, as investors showed little patience for crowded, lower-margin corners of fintech last year.

“In fintech, you see hyper-competition,” said Ram Ahluwalia, founder and chief executive officer of investment adviser Lumida. “Everyone’s trying to be everything to everyone, and that competition is the enemy of profit and returns.” He added that he doesn’t expect the industry to perform better in 2026.

ARKF included holdings in PayPal, Adyen and Toast, but it also had a couple of fintech winners among its top 10 performers: Robinhood Markets Inc. and Shopify Inc., up 204% and 51% last year, respectively. ARK’s White said the fund manager added to its investments in those companies after some profit-taking following Circle Internet Group Inc.’s June initial public offering. The stablecoin issuer ended the year up 156%, but down roughly 70% from its post-listing peak that same month.

Wood, a high-profile Wall Street manager famed for her bold bets on disruptive technologies, rose to prominence during the height of the pandemic with calls on stocks such as Tesla Inc., drawing in waves of retail investors and pushing ARK’s assets to more than $60 billion at their peak.

Despite ARKF’s double-digit gains last year, Wood may be struggling to convert her long-term vision into sustained investor demand. Aside from a brief influx of more than $600 million around September, ARKF flows were largely flat last year. Sharp swings in the investor’s flagship ARK Innovation ETF over the years have left many retail investors selective about when, or whether, to recommit to the firm’s funds.

–With assistance from Isabelle Lee.

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