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Cathie Wood, chief executive of Ark Investment Management, frequently buys technology stocks that she says will disrupt a number of sectors.
Sometimes, her strategy pays off: The flagship Ark Innovation ETF (ARKK) has gained 5% this year as of Jan. 17, outperforming the S&P 500 and the Nasdaq Composite.
Last week, she bought a space-tech stock.
Her investment choices often divide Wall Street, with some applauding her foresight in disruptive industries and others questioning the sustainability of her high-risk, high-reward strategy.
Related: Every major Wall Street analyst's S&P 500 forecast for 2025
Wood delivered an extraordinary 153% return in 2020. Her longer-term performance tells a less attractive story:
Between Jan 17, 2024, and Jan. 17, 2025, ARK Innovation ETF, with $6.3 billion under management, returned 29.81%, with an annualized three-year return of negative 9.43% and a five-year return of positive 2.63%.
In comparison, the Nasdaq Composite gained 33.1% over the one year, with a three-year annualized return of 10.52% and a five-year return of 16.81%.
Cathie Wood’s investment strategy explained
Cathie Wood’s investment strategy is straightforward: Her Ark ETFs typically buy shares in emerging high-tech companies in fields such as artificial intelligence, blockchain, biotechnology, and robotics.
Wood says these companies have the potential to reshape industries, but their volatility leads to major fluctuations in Ark funds' values.
Related: Cathie Wood's net worth: The Ark Invest CEO's wealth & income
Amy Arnott, portfolio strategist at Morningstar Research Services, calculated that Ark Innovation wiped $7.1 billion of shareholder wealth from its launch in 2014 through 2023.
That put the ETF as No. 3 on her wealth destruction list for mutual funds and ETFs for the past decade.
Wood recently expressed optimism about a potential shift toward fewer regulations under Donald Trump's presidency, especially in technology, cryptocurrencies and digital assets. On Jan. 20, Trump was inaugurated as the 47th president of the U.S.
“In the last four years we saw massive concentration toward very few stocks,” Wood told CNN in December. “I think the market’s going to broaden out right now and reward companies who are at the leading edge of innovation.”
Not all investors share Wood's optimism. Over the past year, Ark Innovation ETF has seen a net outflow of $3 billion, with $320 million exiting the fund in the past month, according to ETF research firm VettaFi.