Cathie Wood predicts the market value of disruptive innovation companies will rise to $200 trillion

Published Wed, Feb 1 20238:42 AM ESTUpdated Wed, Feb 1 20238:49 AM EST

Ark Invest's Cathie Wood said Wednesday she's standing by her disruptive innovation strategy, betting on the market value of these companies to compound 40% annually to hit $200 trillion by 2030. "Our focus is solely on disruptive innovation. I think we're the only company in the investment world with the sole focus," Wood said on CNBC's " Squawk Box ." "As the world's time horizon shrank to one quarter, we stayed with our five year investment time horizon and we are positioned for these super exponential growth trajectories." After a brutal 2022, her flagship Ark Innovation ETF (ARKK) rallied 27.8% in January alone as her beaten-down innovation darlings staged a big comeback in the new year. The fund scored its best month ever since its inception in 2014. ARKK 1Y mountain Ark Innovation ETF She said the market value of truly disruptive innovation is around $13 trillion globally today, less than roughly 10% of the global equity market. She sees the figure rise $200 trillion by the year 2030 with a 40% compound annual rate of return. "Forty percent seems astonishingly high to most of us because we've spent the last 50 years in a linear growth world," Wood said. "But thanks to artificial intelligence, and the 14 different technologies around which we have centered our research, we believe that we are ready for prime time for ...super exponential growth." The Innovation fund is focused on advanced technology companies in areas such as genomics, robotics, internet and fintech. These companies, sometime pre-profit start-ups, were hit particularly hard last year by rising rates and soaring inflation. The widely followed investor said she sticks with her call for deflation, taking clues from the bond market where yields have retreated from recent highs. "The bond market is basically saying the Fed is close to the end of this tightening move, and is also saying that inflation will surprise on the low side of expectations," Wood said. "We do believe and we have been saying for some time, that the inflation is unwinding. We think the market is leading the Fed." The Federal Reserve is expected to raise interest rates by a quarter point Wednesday, which would mark the smallest increase since the first hike of the cycle last March. Many investors expect the central bank might succeed in a soft landing for the economy while also snuffing out inflation sufficiently to move back to easing policy.