Why Cathie Wood Thinks There's A Cooler Kid Than FAANG In 'Innovation' Town

Ark Investment Management founder Cathie Wood in March discussed the merits of her portfolio of funds and their composition on a Twitter Spaces event.

ETFs Better Any Day:  Wood said she saw the reluctance among pension funds to invest in ETFs changing slowly. It was Asian pensions and sovereign wealth funds that started using Ark’s ETFs much in the same way they used the Nasdaq and the S&P, she had said on a Twitter Spaces hosted by Pensions & Investment’s editor-in-chief.

They used them to fulfill their allocation needs quickly, and because of the high liquidity of the ETFs, given the ecosystem around the ETFs that include authorized participants, the market makers, and the ways that they handle both creations and redemptions, the fund manager said.

Wood clarified that Ark’s funds did not have a huge outflow, except what was seen in early 2021, and their net retention rates have been “shocking.” 

Ark does not have many trading accounts but has sovereign wealth funds investing in it, Wood added.

The sovereign wealth funds were in because they can consider Ark Innovation ETF or Ark Genomic Revolution ETF for the fund’s genomics or multi-omics strategies or Ark Next-Generation Internet ETF for autonomous technology and robotics strategy, the fund manager said.

“They can treat them [funds} as stocks and they have some latitude,” Wood said.

See Also: How To Invest In Startups

New Nasdaq:  “We are the new Nasdaq,” the fund manager said, repeating her view from the past. She clarified that she wasn’t taking a dig at Nasdaq but was attempting to drive home the point that Ark fulfills the role.

“We are what the Nasdaq used to be in the 80s and 90s,” Wood said.

Giving the logic of why some of the biggest tech stocks that go by the acronym FAANGs are not part of Ark’s portfolio, Wood said she sees them being disrupted.

These FAANGs are now the largest parts of the Nasdaq and the S&P 500 Index, she noted.

Meta Platforms, Inc., Apple, Inc., Amazon, Inc., Alphabet, Inc. and Netflix, Inc. are the big tech companies collectively called FAANGs.

“So you will find most of our stocks in those broad-based benchmarks and so we're a very good diversifier and we are access to pure play, truly disruptive innovation,” Wood said.

With OpenAI’s ChatGPT and GPT-4, there is likely to huge disruption to Google and Apple, now that ChatGPT has “plugins,” she said.

“The FAANGs used to be disruptors, now there's a whole new layer of disruption heading directly for them.”

Read Next: ChatGPT Causes Legal Chaos After Making Up Cases To Ease Lawyer's Workload

This story was originally published on March 29, 2023.