Cathy Wood
Crystal Mercedes | CNBC
Ark Investment Management founder and CEO Cathie Wood said she is not worried about the recent decline in her funds and that the bull market is just including more strategies such as value.
The investor said that her disruptive strategy is bearing fruit over time and that she is making money from selling it.
“Right now the market is expanding and we think in the underlying sense that the bull market is strengthening and that will play to our advantage in the long run,” Wood said on CNBC’s “Closing Bell” on Monday.
Wood manages five ETFs focused on ‘disruptive innovation’ that have raised more than $ 15 billion in investor money this year alone. Ark’s flagship fund – Ark Innovation – returned almost 150% in 2020 as the pandemic accelerated innovation trends and now has more than $ 17 billion in net assets. However, ARKK is down about 8% this year amid recent weakening in technology stocks, under pressure from rising interest rates.
“We’re getting big opportunities” to buy the pure stakes in the funds, Wood said. “If we get such opportunities to invest in pure plays instead of more mature plays … we’ll move on to pure plays again.”
“We are becoming increasingly optimistic about our portfolios in this sale,” she added.
Wood used the recent technological weakness as an opportunity to buy a dip into some of her ETF’s top interests. According to the firm’s announcement, Wood has made major purchases from Tesla, Teladoc, Zoom Video and Palantir. Ark Innovation also recently acquired shares of Square, Roku, Zillow and Shopify.
Investors have abandoned some of their high-growth names as bond yields have risen in recent weeks. Wood said Ark Invest is surprised that the market has never achieved a 0.5%, 1% or 1.5% return on the US Treasury for ten years.
“We do think the rapid rise in interest rates scares people. It has become very comfortable in a low interest rate environment: nothing changes much, the Fed has our backs and so on,” Wood said.
Wood added that this kind of withdrawal happened to Ark during the fourth quarter of 2016, when President Donald Trump was elected and promised to lower tax rates. During the period, Ark’s strategies became negative.
“The bull market has expanded into value or cyclical sectors, and I thought that would be very good news for our longer-lasting strategies. The worst thing that could have happened to us was another technology and telecommunications bubble where the market was shrinking. so only a few groups won, ‘Wood said.