A veteran money manager known for her bold predictions, Cathie Wood's focus on disruptive innovation has made her one to watch in turbulent times.
Wood has a strong history in finance, going back to the 1970s, but she shot to prominence after going at it alone in 2013.
Her vision for actively managed exchange-traded funds (ETFs), based on disruptive innovation, was deemed too risky by AllianceBernstein, so she left the asset management firm, where she managed over USD$5 billion in assets, to found Ark Invest.
Since then, Wood has made a name for herself as the master of the modern ETF.
It's true that ETFs have traditionally been seen as a ‘boring’ investment vehicle, but Wood is known for her big plays on disruptive innovation.
She was mocked back in 2017 when she said Tesla stock could hit USD$4000 in five years – a seemingly impossible 1100 per cent increase.
At the time, Tesla shares were trading at record highs, but Elon Musk's baby was expected to feel the shock as auto-maker giants like General Motors entered the electric vehicle business.
Wood still saw a strong future in Tesla, despite the growing competition, thanks to its advancements in disruptive innovation such as software, artificial intelligence and battery technology.
Wood stood by her prediction as Tesla struggled.
The carmaker eventually rallied to achieve that USD$4000 (on a split adjusted basis) stock price goal in only three years, forcing her critics to eat their words.
Such foresight also gives pause for thought, considering Wood's other seemingly impossible predictions, such as that – with the involvement of institutional investors – bitcoin could hit USD$500,000 within five years.
Wood's unshakeable convictions not only anticipate the future, they also help shape it – such as reassuring the Tesla shareholder faithful to hold their nerve during those difficult times.
Her success hasn't gone unnoticed.
She spoke at the World Economic Forum in 2016 and 2017. In 2018, Bloomberg declared her one of the 50 people defining global business.
Wood’s focus on disruptive innovation can reap huge rewards but also comes with a level of risk, with most innovative businesses still in their infancy.
However, her ETFs can provide exposure to areas of the market that investors perhaps aren’t as familiar with.
She's not afraid to stand her ground.
After legendary hedge fund manager Michael Burry – of The Big Short fame – bet against her disruptive innovation fund last quarter, Wood declared Burry doesn't understand the fundamentals creating "explosive growth" in the innovation space.
Ark Invest's results speak for themselves, with its flagship Ark Innovation ETF (ARKK) delivering a stunning 153 per cent return in 2020.
It averaged an annual return of around 48 per cent over the past five years, almost tripling the performance of the benchmark S&P 500.
Today, Wood is the sole portfolio manager overseeing almost USD$85 billion – up from less than USD$10 billion at the end of 2019.
It's clear that investors believe in her and trust her ETFs with their capital.
Wood has a strong team behind her, looking for innovations on the five to 10-year horizon.
Ark Invest maintains a range of ETFs focusing on the likes of next-generation internet, genomic research, autonomous technology and space exploration.
Meanwhile, Ark's plans for a new Transparency ETF will closely follow an index which excludes industries such as alcohol, banking, gambling, oil and gas.
While many investment firms hold their cards close to their chest, Wood is known for her openness and transparency.
Her daily email blasts include decisions to buy or sell stocks.
Her prominent media appearances also make headlines.
With a confident approach to panels and discussions, she clearly affects share prices with her comments and decisions.
Wood's investments are known to move markets and her reasoning and rationale behind stock picks connects with individual investors, presenting a shift after generations of following successful investors such as Warren Buffet, whose approach is more risk-averse and value-focused.
Ark Invest's success with transparent funds has seen other investment houses follow suit, as investors begin to favour actively traded funds which disclose their holdings daily.
With interest rates at rock bottom, it has been a great time for Ark Invest's ETFs to grow, with more retail investors entering the market than ever before.
Wood is literally a mover and shaker of the stock market and, whichever the market moves, her bold predictions will continue to shape the future.
Josh Gilbert is market analyst at eToro.
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