Cathie Wood — known for her innovation ETFs that garnered billions in inflows during the pandemic — said Ark Invest is internally testing a fund that takes the strategy a step further by simultaneously betting against major stocks in the benchmarks that are being disrupted.
"We're testing out a portfolio but it's really Ark on steroids," Wood told CNBC's "Squawk Box" on Wednesday. Wood said she wants to test the strategy on Ark's employees and did not say when the fund would be made available to retail investors.
"We think the benchmarks are where the big risks are long-term because they are filling up with value-traps, those companies that have done very well historically but are going to be disintermediated and disrupted by the massive amount of innovation that's taking place."
- Wood added.
$ARK Innovation ETF(ARKK.US)$, the flagship fund of Ark investment, is down15%while the $S&P 500 Index(.SPX.US)$ is up 25% this year.
"In five years, the world will look nothing like it does today and we're invested in all the disruptors, the winners, that are going to disrupt the traditional world order."
- Wood said.
$Tesla(TSLA.US)$is Ark Innovation's top holding, with other names like $Coinbase(COIN.US)$, $Teladoc Health(TDOC.US)$, $Unity Software(U.US)$, $Roku Inc(ROKU.US)$and $Zoom Video Communications(ZM.US)$.
To put numbers to Wood's theory, she said that innovation is currently priced in the public global market place at roughly between $10 and $15 trillion. In ten years, disruptive innovation will be about $200 trillion of that market capitalization.
"It will go from a little bit more than 10% of global equity market caps to what we believe could be more than half. That's how much disruption is evolving thanks to DNA sequencing, robotics, energy storage, artificial intelligence and blockchain technology.”
- Wood added.
What do you think about Cathie Wood's recent trading? Will you invest in ARKK if Cathie Wood starts using the new strategy?
Source: CNBC