ARK Invest CEO Cathie Wood‘s strategy is to pivot during the anticipated deflationary period and focus heavily on innovation and technological advancements.
What Happened: Wood shared her insights on the 2024 market outlook and her investment strategy Friday on CNBC’s “The Exchange.” Here’s what she had to say:
- Deflation: This will be a key theme in 2024, prompting the Federal Reserve to cut rates aggressively. This economic environment, combined with technological progress, sets up firms that are well-adapted to deflation and dedicated to innovation for significant expansion in the upcoming years.
- Diversification: The ARK Innovation ETF (NYSE:ARKK), Wood’s flagship fund, has seen a remarkable turnaround, boasting a 70% year-to-date increase. Wood attributed this success to concentrating on high-conviction stocks during the downturn, a move considered risky by many. As the market stabilizes, ARK is diversifying its portfolio, eyeing the potential reopening of the IPO market and adding back some previously sold names due to clearer outlooks.
- Artificial Intelligence (AI): A significant shift in Wood’s strategy is the increased focus on companies at the forefront of AI and technology. She highlighted Meta Platforms Inc. (NASDAQ:META), where ARK had previously reduced holdings due to skepticism about its Metaverse strategy. Wood’s renewed interest in Meta aligns with CEO Mark Zuckerberg‘s leveraging open-source AI.
- The Rise of Gene Editing: Wood also underscored the transformative potential of gene editing technologies, specifically mentioning CRISPR Therapeutics. The recent FDA approval of the first gene therapy using CRISPR CAS 9 for sickle cell disease is seen as a groundbreaking development. This sector, according to Wood, has been inefficiently priced due to its early-stage nature and cash-burn issues, presenting an attractive investment opportunity.
- ARK’s Top Holdings: Wood revealed that Coinbase Global Inc. (NASDAQ:CRSP)
Table: ARK Innovation ETF Top 10 Holdings
| Security Name | Sector | Price | Weight | YTD Return |
|---|---|---|---|---|
| Coinbase Global, Inc. | Financials | 175.48 | 11.05% | 395.85% |
| Tesla, Inc. | Consumer Discretionary | 252.61 | 7.63% | 105.07% |
| UIPath Inc. | Information Technology | 25.33 | 7.32% | 99.29% |
| Roku, Inc. | Communication Services | 90.61 | 6.95% | 122.62% |
| Zoom Video Communications, Inc. | Information Technology | 72.43 | 6.84% | 6.92% |
| Block, Inc. | Financials | 76.69 | 6.50% | 22.04% |
| Roblox Corporation | Communication Services | 45.98 | 4.20% | 61.58% |
| Twilio Inc. | Information Technology | 75.80 | 4.06% | 54.82% |
| CRISPR Therapeutics AG | Health Care | 63.63 | 3.92% | 56.53% |
| Unity Software Inc. | Information Technology | 39.30 | 3.72% | 37.44% |
Image: Courtesy of Ark
