Cathy Wood
Crystal Mercedes | CNBC
Ark Investment Management founder and CEO Cathie Wood said she is not concerned about the recent drop in her funds and that the bull market is simply expanding to include more strategies as a value.
The skilled investor added that, over time, her disruptive strategy will pay off, and she is capitalizing on liquidation.
“At the moment, the market is expanding and we think that, in an underlying way, the bull market is strengthening and that will be beneficial for us in the long run,” said Wood in CNBC’s Closing Bell on Monday.
Wood manages five ETFs focused on “disruptive innovation” that have raised more than $ 15 billion in cash from investors this year alone. Ark’s main fund – Ark Innovation – returned nearly 150% in 2020, as the pandemic accelerated innovation trends and now has more than $ 17 billion in net assets. However, ARKK has dropped about 8% this year amid the recent weakness in technology stocks, pressured by rising interest rates.
“We are getting great opportunities” in the liquidation to buy the funds’ pure play names, Wood said. “When we have opportunities like this to invest in pure plays instead of more mature ones … we will return to pure plays.”
“We are becoming more and more optimistic about our portfolios in this settlement,” she added.
Wood took advantage of the technology’s recent weakness as an opportunity to buy the drop in some of its ETF’s major holdings. Wood made major purchases from Tesla, Teladoc, Zoom Video and Palantir, according to company disclosures. Ark Innovation also recently won shares in Square, Roku, Zillow and Shopify.
Investors have left some of their high-growth names on the rise in bond yields in recent weeks. Wood said Ark Invest is impressed that the market has never quoted 0.5%, 1% or 1.5% yield in the U.S. Treasury in 10 years.
“We think the speed of rising interest rates is frightening people. He was very comfortable in an environment of low interest rates: nothing much changing, the Fed has our backs and so on,” said Wood.
Wood added that this kind of setback happened to Ark during the fourth quarter of 2016, when President Donald Trump was elected and promised to cut tax rates. During that time, Ark’s strategies were negative.
“The bull market was expanding to incorporate value or more cyclical sectors and I thought it would be very good news for our long-term strategies. The worst thing that could have happened to us was another technology and telecommunications bubble where the market narrowed so that only a few groups won, “said Wood.