It’s a high-flying, high-risk, high-reward tier of investing. And it is put Wood’s followers on a white-knuckle experience in 2021.
But this 12 months hasn’t been almost as variety to Wood because the final. The Innovation ETF was down 2.5% by way of late August, regardless of a red-hot marketplace for tech with the Nasdaq up greater than 18% to date in 2021.
“I don’t think we’re in a bubble, which is what I think many bears think we are,” Wood informed CNBC. “We have nothing like that right now. In fact, you see a lot of IPOs or SPACs coming out and falling to Earth. We couldn’t be further away from a bubble.”
How Wood developed her technique
Wood speaks from expertise. She’s no millennial or Gen Z investor for whom the 2000 tech implosion is merely a battle story informed by older merchants. The 65-year-old Wood lived by way of the final main tech crash, in addition to the notorious Black Monday of 1987.
She labored for Prudential-owned cash supervisor Jennison Associates for 18 years within the Eighties and Nineteen Nineties after which spent a dozen years at AllianceBernstein earlier than leaving in 2013.
But then, AllianceBernstein handed on her concept to launch a collection of actively managed exchange-traded funds. So she struck out on her personal and began Ark in 2014.
That give attention to disruption means Wood ties her ETF’s fortunes to visionary however mercurial leaders.
Wood can also be OK with firms like Tesla issuing extra inventory to boost cash to fund futuristic tasks like autonomous autos. Some buyers are cautious of that technique as a result of the brand new shares decrease the worth of current buyers’ holdings, however she thinks that is a short-sighted argument, significantly from Tesla bears.
“We’re not afraid of dilution … if we think they’re doing it for the right reason,” she informed CNBC. “We wanted them to scale as quickly as possible because we think if we’re right on autonomous …Tesla could get the lion’s share of that market, certainly in the United States.”
“Every passing day, especially the more we learn about their AI expertise and how they’re really driving the space … we believe they have the pole position,” she mentioned, noting that Ark analysts had been “blown away” by Musk’s presentation.
Growth in any respect prices
Wood acknowledges her growth-at-all-costs means of investing isn’t for everybody.
Wood added that she thinks buyers additionally ought to put a small share of their cash in bitcoin, one other dangerous wager. And she careworn that buyers need to overlook the inevitable short-term bumps that include any asset. It’s important to keep up longer-term convictions and make investments for future development, Wood believes.
“A lot of companies catering to short-term investors who wanted profits now [have] invested more in stock buybacks and dividends over innovation,” she mentioned. “That puts them in harm’s way.”
A colleague describes Wood’s go-big-or-go-home method as a mannequin for the brand new means of investing. Too many fund managers are afraid to look far into the long run when judging an organization’s deserves, as a substitute focusing myopically on the prior and subsequent quarterly earnings reviews.
But a rising refrain of skeptics assume Wood’s funds might finally collapse. Michael Burry, one of many super-bearish buyers made well-known in “The Big Short,” just lately established a brief place on the Ark Innovation ETF — basically betting that it’ll fall sharply.
Some tech inventory veterans additionally marvel if Wood is simply an investing taste of the month, evaluating her to once-popular portfolio managers like Kevin Landis of Firsthand Funds, Alberto Vilar of Amerindo and Garrett Van Wagoner, who ran a preferred emerging-growth fund within the late Nineteen Nineties.
Is Wood destined for related ignominy?
“Our investment approach is similar to Ark in that we are focusing on tech. But we’re different in that we avoid concentration,”Jeremie Capron, head of analysis at ROBO Global, informed CNN Business in March.
For the time being, Wood is having the final snicker.
Yes, her fund’s returns could also be unstable year-to-year — the Ark Innovation ETF fell almost 25% in 2018 earlier than rebounding 30% in 2019 — but it surely has tended to clean out. The five-year common annualized return for the Ark Innovation ETF by way of mid-2021 was 48.6%, in comparison with 17.7% for the S&P 500.
As lengthy as that long-term development continues, Ark acolytes could forgive a down 12 months every so often as Wood continues to swing for the fences.