Reference: Visit websiteWhen one of Cathie Wood's favorite stocks tumbles, the head of Ark Investment Management frequently responds by increasing her position.
If you're an experienced investor, you've likely heard of Wood. She may be the country's most famous money manager after Warren Buffett.
Wood (Mama Cathie to her followers) soared to acclaim after a stupendous return of 153% in 2020 and lucid presentations of her investment philosophy in numerous media appearances.
But her longer-term performance is less impressive. Wood's flagship Ark Innovation ETF ( ARKK ) , with $6.5 billion in assets, produced annualized returns of 11% for the past 12 months, negative 25% for the past three years and positive 1% for five years.
That's woeful compared with the S⁘P 500. The index posted positive returns of 29% for one year, 10% for three years, and 15% for five years. Ark Innovation's numbers also fall well shy of Wood's goal for annual returns of at least 15% over five-year periods.
Her investment philosophy is pretty simple. Ark ETFs usually purchase emerging-company stocks in the high-tech categories of artificial intelligence, blockchain, DNA sequencing, energy storage, and robotics. Wood maintains that companies in those categories will change the world.
Of course, these stocks are quite volatile, so the Ark funds frequently fluctuate up and down. Wood adds to and subtracts from her top names frequently.
Investment research titan Morningstar offers a harsh assessment of Wood and Ark Innovation ETF. Investing in young companies with slim earnings "demands forecasting talent, which ARK Investment Management lacks," Morningstar analyst Robby Greengold wrote in March.
The potential of Wood's five high-tech platforms listed above is "compelling," he said. "But the firm's ability to spot winners and manage their myriad risks is less so…. It has not proved it is worth the risks it takes."
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