Cathie Wood says don’t underestimate the little guy changing investing

Published Thu, Mar 25 20211:06 PM EDTUpdated Thu, Mar 25 20211:46 PM EDT

Ark Invest's Cathie Wood on Thursday defended retail investors and their open-mindedness about innovation's role in disrupting the world order and Wall Street. "I think that the heavily indexed or benchmark approach to investing is ripe for change and I think that the retail investor, the individual investor, is actually leading the charge," Wood said during the Cboe "Exchanging Perspectives" webinar on Thursday. Wood — CIO and CEO of Ark Investment Management — has made a name for herself by investing in "disruptive innovation" stocks. Wood's flagship fund, Ark Innovation , has seen more than $16 billion flood her fund in the past year, according to FactSet. Wood has big bets on names like Tesla , Teladoc and Roku. Similar to some of Wood's controversial top holdings due to their lofty valuations, Ark Invest also takes an unconventional approach to running its ETFs. Ark discloses all of its trades on a daily basis in a nightly email blast and emphasizes transparency to clients. Wood has garnered a large fan club after Ark Innovation returned nearly 150% last year. The hot-handed investor gets much of her attention from a younger demographic that she said appreciates the place innovation has in the world today. "The millennials and the Gen Z's...they love learning," said Wood. "They're really excited about the new technologies that are evolving today, they're really at the leading edge of them and understand them and are comfortable with them and I have been very gratified at the kind of response we've gotten to our research and the engagement." Amid an influx of retail investors into the stock market during the pandemic and trading manias like what took place in GameStop in January, the influence of these new traders is drawing scrutiny. Many legislators and big investors are dismissing the amateur traders as reckless speculators who are not doing deep research. Wood said not to discount the sophistication and vision these smaller investors have. "I know that a lot of regulators and people in the investment business are concerned that we're going to hurt the little guy here by allowing this kind of behavior," said Wood. "Don't underestimate this group of people, they are actually more progressive than I think institutional investors are," she added. Wood said younger investors realize the value traps in the major benchmarks today and are looking forward. "I'm not crazy about the idea of indexes from an innovation point of view. It's kind of an oxymoron. Stocks in indexes are there because of their past success and disruptive innovation is likely to disrupt the traditional world order," added Wood. Shares of Ark Innovation are down more than 12% this month amid a rotation out of technology stocks pressured by rising interest rates. Wood said she is not worried about the shift to value names but instead she is thrilled to see the bull market broadening out. This climate will set innovation up for strong gains in the future. "They might speculate on Robinhood but the beauty of what's going on is they're going to learn very quickly because losses impact psychology and sentiment much more than gains do," Wood added.

Cathie Wood

Source: CNBC

Ark Invest's Cathie Wood on Thursday defended retail investors and their open-mindedness about innovation's role in disrupting the world order and Wall Street.

"I think that the heavily indexed or benchmark approach to investing is ripe for change and I think that the retail investor, the individual investor, is actually leading the charge," Wood said during the Cboe "Exchanging Perspectives" webinar on Thursday.

Wood — CIO and CEO of Ark Investment Management — has made a name for herself by investing in "disruptive innovation" stocks. Wood's flagship fund, Ark Innovation, has seen more than $16 billion flood her fund in the past year, according to FactSet. Wood has big bets on names like Tesla, Teladoc and Roku.