After 12 years as chief investment officer of global thematic strategies at investment giant AllianceBernstein, Cathie Wood founded ARK (Active Research Knowledge) Funds in 2014. Its thematic investment funds target disruptive and innovative high-growth companies, the technological forces altering economies and consumer behavior.
Cathie Wood’s flagship ARK Innovation ETF (exchange-traded fund) invests in next-generation technology like videoconferencing, telemedicine, energy storage, digital streaming and the metaverse. Wood’s team has capitalized on investors’ fear of missing out (FOMO) on big trends and bigger gains.
Originally published In Luckbox Magazine. Subscribe for free at getluckbox.com/dailyfx
In 2020, five of ARK’s seven ETFs achieved an average return of 141%.
A gushing media cheered Wood’s success. Financhill, a company that offers a suite of financial tools, called her “the most underrated investor in the game.” Barron’s said she “disrupted” investment management. In a New York Times profile titled God, Money, YOLO: How Cathie Wood Found Her Flock, the authors highlighted the bold Tesla price prediction Wood made while debating (or besting) Kevin O’Leary, Shark Tank’s Mr. Wonderful.
But times have changed. With recent market conditions working against tech stocks, the flagship fund and other ARK ETFs face new pressures. For months, investors have dumped growth stocks on speculation that the Federal Reserve[1] would accelerate its timeline on interest rate hikes to tame inflation and concerns about high valuations.
Longtime critics have argued that ARK Funds, like the tech-heavy Nasdaq[2]-100, benefited from the Federal Reserve’s decade of low interest rates and the cheap money policies that have prevailed since the fund’s inception. Add on massive amounts of Congressional stimulus in 2020 and 2021—plus a new wave of speculators—and the market capitalization of stocks trading at a price-to-sales above 20 surpassed the nosebleed valuations during the dot-com bubble. (See
