Cathie Wood says the underlying bull market is strengthening and finding great buying opportunities in the sell-off


Cathy Wood

Crystal Mercedes | CNBC

Ark Investment Management Founder and CEO Cathie Wood said she is not concerned about the recent slump in her funds and that the bull market is simply broadening to include more strategies like security.

The hasty investor added that over time, her disruptive strategy will pay off and she’s capitalizing on the sell off.

“Right now the market is widening and we believe that in an underlying sense the bull market is strengthening and that will play to our benefit in the long run,” Wood said on CNBC’s “Closing Bell” on Monday.

Wood manages five ETFs focused on “disruptive innovation” that have raised more than $ 15 billion of money from investors this year alone. Ark’s flagship fund Ark Innovation returned nearly 150% in 2020 as the pandemic accelerated innovation trends and now has more than $ 17 billion in net assets. However, ARKK is down about 8% this year amid recent weakness in tech stocks, pressured by rising interest rates.

“We’re getting great opportunities” in the sell-off to buy the pure gambling names into the funds, Wood said. “When we have opportunities like this to invest in pure plays instead of more mature plays … we will go back to pure plays.”

We are becoming increasingly optimistic about our portfolios in this sell-off, “he added.

Wood said Ark Invest is surprised the market has never valued a 0.5%, 1% or 1.5% yield on the 10-year US Treasury.

“We think the speed of rising interest rates is scaring people. It became very comfortable in a low interest rate environment – nothing changes much, the Fed has our backing and so on,” Wood said.

Wood added that this kind of setback happened to Ark during the fourth quarter of 2016, when President Donald Trump was elected and vowed to cut tax rates. During that period, Ark’s strategies turned negative.

“The bull market was widening to incorporate value or more cyclical sectors and I thought that would be very good news for our long-term strategies. The worst thing that could have happened to us was another tech and telecom bubble where the market shrank so that only a few groups won, “Wood said.

Staying the course, Wood took advantage of the recent technological weakness as an opportunity to buy the fall in some of his ETF’s major holdings. Wood has made large purchases of Tesla, Teladoc, Zoom Video, and Palantir. Ark Innovation also acquired shares in Square, Roku, Zillow, and Shopify recently.

“We’re getting great opportunities” in the sell-off to buy the pure names of their funds, Wood said. “When we have opportunities like this to invest in pure plays instead of more mature plays … we will go back to playing pure.”

We are becoming increasingly optimistic about our portfolios in this sell-off, “he added.

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