Disruptive innovation is by its very nature a volatile and controversial investment, but it tends to pay off in the long term, said ARK Investment Management’s founding CEO and CIO Cathie Wood.
“Innovation is inherently controversial and tends to be quite a volatile strategy,” Wood said in the latest “In the Know with Cathie Wood” webcast. “If you have a long-term investment horizon, which you have to when you’re investing in disruptive innovation, things tend to work out.”
Wood also noted that in the long term, ARK’s strategies have “outperformed the broad-based benchmarks,” which she argues is something that many active managers can’t say.
“If you look at the five-year track record of our strategies … you will see numbers that I would put against any other active management strategy out there,” she said. “We have outpaced [and] outperformed the broad-based benchmarks … and as I understand it, most active managers have not. In fact, the vast majority of active managers have not.”
ARK’s flagship fund, the ARK Innovation ETF (NYSEArca: ARKK), has experienced considerable volatility over the past year. But according to Wood, volatility comes with the territory.
“We do go through periods of significant volatility,” she said. “But … if we’ve done our research correctly … our companies are usually rewarded for their breakthrough technologies that are transformational in terms of changing the way the world works.”
Wood explained that Ark’s “conviction in [its] research has only grown,” noting that its research suggests that the market cap opportunity associated with innovation has grown to $210 trillion from $75 trillion two years, “with artificial intelligence being probably the biggest reason” for the expanded potential in the sector.
“The momentum is in place,” she added. “Our research is pointing to bigger and bigger opportunities.”
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