Cathie Wood advises against investing a significant portion of one's portfolio in her 'volatile' ARK Innovation fund.

Cathie Wood is defending her underperforming following a rocky stretch.

"On Friday, she informed CNBC's "Squawk Box" that the fund is volatile and should not be a significant part of any portfolio. Instead, it is now considered a satellite strategy, although they believe it will become the norm in the future."

The technology fund's shares have dropped by almost two-thirds of their value since their pandemic peak, when market hype and the meme stock frenzy pushed shares to nearly $160 and caused the fund to more than double in 2020, with a 149% increase.

Despite the CEO's investment strategies, the fund has underperformed, leading to skepticism among investors. The fund's shares have only gained 2.8% this year, falling short of the S&P 500's 24% increase. Over the past three years, the fund has lost about 23% annually, according to FactSet data.

Wood stated that several "interesting behaviors" during the Covid-19 pandemic contributed to the rise of ARKK shares, but emphasized that the underlying technologies and research supporting her firm's investments are "far more advanced."

The multiomics life sciences and health care sectors are currently the largest obstacle to fund growth. However, with the emergence of new genome therapy editing companies, alternative disease-curing methods may become more accessible.

"Our fund is a great complement to broad-based benchmarks because it's unique," she stated. "Ultimately, the truth will prevail."