Crystal Mercedes | CNBC
Ark Investment Management founder and CEO Cathie Wood said she wasn’t worried about the recent decline in her funds and that the bull market was simply expanding into other strategies like value.
The die-hard investor added that her disruptive strategy will pay off over time and she will benefit from the sell-off.
“Right now the market is expanding and we believe that the bull market is getting stronger in a sense and that will be to our advantage in the long run,” Wood said on CNBC’s Closing Bell on Monday.
Wood manages five ETFs that focus on “disruptive innovation” and have raised more than $ 15 billion in investor money this year alone. Ark’s flagship fund – Ark Innovation – returned nearly 150% in 2020 as the pandemic accelerated innovation trends and now has net assets of more than $ 17 billion. However, ARKK is down more than 11% this year as recent tech stocks have come under pressure on rising interest rates.
“We have great opportunities” in the sale to buy the game-only names in the fund, said Wood. “If we get such opportunities to invest in pure games instead of more mature games, we will go back to pure games.”
“We are becoming more and more optimistic about our portfolios in this sell-off,” she added.
Wood took the recent technical weakness as an opportunity to buy the jump into some of their ETF’s top positions. Wood has made major purchases at Tesla, Teladoc, Zoom Video, and Palantir, according to the company. Ark Innovation also recently acquired shares in Square, Roku, Zillow, and Shopify.
Investors have left some of their high-growth names as bond yields have risen in recent weeks. According to Wood, Ark Invest is impressed that the market has never priced in a 0.5%, 1%, or 1.5% return for the 10-year U.S. Treasury Department.
“We believe the speed of rate hikes is terrifying. In a low interest rate environment, it became very comfortable: not much has changed, the Fed has our backs and so on,” said Wood.
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 cut tax rates. During this time, Ark’s strategies turned negative.
“The bull market expanded to include value or more cyclical sectors and I thought this would be very good news for our strategies over the long term. The worst that could happen to us was another tech and telecom bubble in which the market narrowed so few groups won, “said Wood.
Ark Innovation is more than 30% off its recent high. The ETF closed 5.8% on Monday.