Cathie Wood made a career betting on the future. Insiders discuss how the ARK Invest founder won the funds (and hearts) of memelord traders and boomer investors alike.

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Summary List Placement

So far, this year has belonged to Cathie Wood. You could argue last year did too.

The founder of ARK Invest has seen flows into her active exchange-traded funds beat those of massive franchises like BlackRock’s iShares, thanks to her blockbuster 2020 performance, which was driven by bets into mega-growth stocks like Tesla.

Her funds have delivered eye-popping returns, with her flagship fund up more than 150% in 2020.

Wood has built such a large following that an announcement about a new ARK fund moved markets. Her podcast has landed big-name guests such as Elon Musk. She’s become a favorite of the r/WallStreetBets crowd.

And she kept a majority stake in her business after minority owner Resolute Asset Management tried to buy her out.

“There’s no dismissing the success those funds have experienced over recent years,” Ben Johnson, director of global ETF and passive strategies research at Morningstar, said. “She and her team are not afraid to take big bets on what the future looks like.”

In 2020, ARK’s family of ETFs grew at the fastest proportional rate of any ETF or mutual-fund manager in Morningstar’s database, which goes back to 2000, according to data from Morningstar Direct.

Last year the New York firm pulled in more than $20.6 billion in net inflows after starting 2020 with a little over $3 billion in assets, delivering an organic growth rate of 650%. ARK has more than $53 billion in assets in its seven ETFs.

The firm’s inflows have earned it a place in the top 10 issuers by AUM, according to Bloomberg, though it’s still a space dominated by passive ETF behemoths like BlackRock and Vanguard.

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Her flagship ETF, the $27 billion ARK Innovation ETF, which trades as ARKK, made 150% last year thanks partly to its largest holding, a $2 billion stake in Tesla, which soared 730% in 2020.

ARK’s overall fortunes are tied closely to Musk’s because Tesla is the largest holding in two other ETFs — the Autonomous Tech and Robotics ETF and the Next Generation Internet ETF. (Wood also has a space-focused ETF in the works.)

She’s placing large bets on companies that are more about potential than profit. Morningstar’s Johnson said her funds are some of the most overvalued — “if not the most overvalued” — in the Morningstar database.

“Those portfolios are holding stocks that look awfully expensive,” he added.

But investors aren’t shying away. Everyone from wirehouse advisors to Robinhood day traders are fans and willing to give her money to put to work.

Giorgi Nadiradze, a New York accountant at an e-commerce company, has invested $10,000 across all seven of ARK’s ETFs. He thinks Wood is one of the few Wall Street investors that young people can relate to because of her transparency on social media and boldness in making high-conviction bets.

“I feel like she bets on the younger generation, and you just can’t lose like that,” the 26-year-old said. “Compared to the other Wall Street stock pickers who kept suggesting these blue-chip companies that have performed well over the last few …read more

Source:: Businessinsider – Finance


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