Why Cathie Wood Expects Flagship ARKK Fund To Outperform Nasdaq-100 Index: 'The Values When It Comes To Innovation Are In Our Fund'

Ark Invest founder Cathie Wood recently delved into the year-to-date performance of the firm's actively-managed exchange-traded funds.

What Happened: The firm’s asset retention of funds through 2021 and 2022 have been spectacular, Wood said in a CNBC interview on Friday. She noted that the metric was up more than 50%, with some of Ark funds boasting over 60% in retention.

As a result, there was bound to be some profit-taking, she added.

Delving into another development, Wood noted that her flagship fund Ark Innovation ETF ARKK had developed a very nice base and a trading range. “I think we began to see opportunistic trading in the mid-30s to the mid-40s and it seemed to top out regularly in the mid-40s,” she said.

"Well, we’ve just broken through that and, so recently, this week, our flows picked up very nicely because there are traders out there who are looking at our stock and says, ‘Wow! If it breaks out of this nice long base, it could have a very powerful move here,'” she added.

Wood noted that, if the ARKK is compared to the Nasdaq 100 Index, the latter, which is a compilation of non-financial big tech stocks, is getting close to its all-time highs. Meanwhile, ARRK, which is filled with stocks of companies focused on innovation, is much closer to its lows, she said.

 “I do think we’re beginning to see investors shift from the Nasdaq 100 or Nasdaq [Composite],  take maybe losses or gains there and into our innovation fund,” the fund manager said.

“I think the values when it comes to innovation are in our fund,” she added.

See Also: Cathie Wood Says Fed Will Have To Adjust Now As Deflation Looms Large: ‘We’ll Be On The Other Side Of The Horror Show We Just Went Through’

Why It's Important: After a not-so-positive year in 2022, Wood's ETFs have come roaring back up this year. The ARKK has gained about 56% this year, thanks to a rally in tech stocks.

Although analysts are divided over the market trajectory for the remainder of the year, a majority are hoping for continued strength as the Fed could be getting closer to its tightening in the current monetary policy cycle.

Techs typically lead the market rally and therefore could be in for more upside in the near term.

Given the underperformance of ARKK relative to the broader tech indices and the concentration of innovation stocks in its portfolio, the ETF could feed off the tech strength.

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