Cathy Wood
Crystal Mercedes CNBC
Ark Investment Management founder and CEO Cathie Wood said she is not worried about the recent decline in her funding and that the bull market is simply expanding to include more strategies such as value.
The determined investor added that, in time, its disruptive strategy will bear fruit and capitalize on the sale.
“Right now the market is expanding and we believe that, in a basic sense, the bull market is consolidating and this will play to our long-term benefit,” Wood told CNBC’s Closing Bell on Monday.
Wood manages five ETFs focused on “disruptive innovation”, which have raised over $ 15 billion in investor money this year alone. Ark’s flagship fund – Ark Innovation – has returned by almost 150% in 2020, as the pandemic has accelerated innovation trends and now has assets of more than $ 17 billion. However, the ARKK has fallen by about 8% this year amid a recent weakness in technology stocks, driven by rising interest rates.
“We have great opportunities” for sale to buy the names of pure pieces from the funds, Wood said. “When we get such opportunities to invest in pure parts instead of more mature parts … we will return to pure parts.”
“We are becoming increasingly optimistic about our portfolios in this sale,” she added.
Wood recently took technological weakness as an opportunity to buy the decline in some of the ETF’s top holdings. Wood made large purchases of Tesla, Teladoc, Zoom Video and Palantir, according to the company’s revelations. Ark Innovation also acquired shares of Square, Roku, Zillow and Shopify recently.
Investors have given up 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 priced a yield of 0.5%, 1% or 1.5% at the US Treasury over 10 years.
“We think the speed of rising interest rates scares people. It’s become very comfortable in a low-interest environment: nothing changes much, the Fed is turning its back on us, and so on,” Wood said.
Wood added that this type of withdrawal happened to Ark in the fourth quarter of 2016, when President Donald Trump was elected and promised to reduce tax rates. During that time, Ark’s strategies became negative.
“The bull market was expanding to incorporate value sectors or more cyclical sectors and we thought it would be very good news for our long-term strategies. so only a few groups won, “Wood said.