Cathie Wood made her name as a technology investor, but her investments have plummeted as big U.S. tech companies have boomed. In a letter to investors, she defended her performance and predicted a market rotation.
By the end of last year, ARK funds had lost a combined $14.3 billion in investor assets, according to Morningstar.
“I want to thank clients for their strong commitment to ARK’s strategies over the past few years. As an investor in our funds myself, I understand that volatility can be frustrating and anxiety-inducing,” Wood wrote in the letter late Wednesday.
Wood is in a bit of an unusual position: He correctly identified the artificial intelligence trend that was a major driver of the market rally, but missed out on the resulting gains by picking the stocks that were least likely to benefit.
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In his defense, Wood was a vocal critic of market concentration caused by big tech stocks, but he did exclude Tesla from the list, even though the electric-car maker remains one of Wood’s favorites because of the promise of self-driving technology.
Wood noted that ARK Innovation’s exposure to the remaining “Magnificent Six” was 2% as of May, down from 30% in 2010.
S&P 500
And 39%
Nasdaq 100.
She argued that AI would ultimately produce more diverse winners.
“In our view, the next few years could be fruitful for a broad swath of the equity market outside the Magnificent Six, as we have already paid the price for tighter monetary policy and rising interest rates this cycle,” Wood wrote.
Wood said he likes stocks like cryptocurrency exchange Coinbase.
,
Software company Palantir
,
Streaming company Roku
,
Sports betting platform DraftKings
,
Automation Specialists UiPath
,
E-commerce company Shopify
,
Biosciences Takes on Crispr Therapeutics
,
twist
,
10X Genomics
.
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Email Adam Clark at adam.clark@barrons.com.
