(Bloomberg) -- Short sellers are betting against Cathie Wood’s flagship fund more than ever before. 

Bearish bets as a percentage of shares outstanding on the $6.9 billion ARK Innovation exchange-traded fund (ticker ARKK) reached a record 22% this week, narrowly eclipsing the previous all-time high set in September, according to data from IHS Markit Ltd. 

A number of concerns are weighing on ARKK and similar products tied to high-risk, high-growth assets, says Mohit Bajaj, director of ETFs at WallachBeth Capital. 

“Part of it is negative market sentiment and falling crypto, which is why we are seeing the short interest,” Bajaj said. And “momentum has slowed down” after the rally the fund had at the start of the year — and the giveback it’s suffered in recent weeks. Aggressive Federal Reserve tightening doesn’t help.

The past two years haven’t been kind to ARKK and other products in the Wood universe of funds. ARKK fell 24% in 2021 and 67% last year when the Federal Reserve started raising interest rates to combat spiraling inflation. A higher interest-rate environment doesn’t bode well for high-growth companies, like those ARKK is focused on.  

And though the fund rallied in January — amid a start-of-the-year uptick in other speculative and growth-stock names — it’s given back much of those gains in February and thus far in March.

Top holdings in ARKK — including Tesla Inc., Zoom Video Communications Inc. and Roku Inc. — have been battered amid the Fed’s inflation-fighting campaign. All three are down 30% or more over the past year. The fund also holds large positions in Block Inc. and Coinbase Global Inc., stocks tied to the crumbling crypto sector.

The fund fell for a fifth straight day on Friday amid a wider stock-market selloff that’s been concentrated around worries over the banking sector. ARKK is on pace for a roughly 12% weekly drop, the worst such decline since August.

Meanwhile, other funds in Wood’s lineup have also seen short interest surge. Short interest as a percentage of shares outstanding on the ARK Genomic Revolution ETF (ARKG) stands at nearly 13%, also a record. That on the ARK Fintech Innovation ETF (ARKF) has climbed in recent days to 5%, the highest since October. 

Many “aspirational” companies remain expensive from a fundamental perspective, said James Pillow a portfolio manager at Moors & Cabot Inc. “Importantly, many of those same narrative-based companies are now technically flashing multiple oversold signals.”

But, Pillow added, “traders should carefully consider their respective P&L if pressing crowded shorts—especially when at historic extremes. Eventually such extremes force the opposite: extreme buying.”

--With assistance from Katie Greifeld.

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