Takeover Battle Subsides as Cathie Wood's Ark Targets 20% ETF Returns

“Tesla’s still in the running, but I would have to say the biggest upside surprises are going to come from the genomic space,” Wood said in the interview. “That’s because the convergence of DNA sequencing, artificial intelligence and gene therapies, importantly Crispr gene editing, is going to cure disease.”

Bitcoin Believer

Wood was a believer in Bitcoin, too, and it powered some of the early gains in her funds. But after discovering an adverse tax rule, Ark decided it wasn’t appropriate for ETFs. Bitcoin, which hit $20,000 this week for the first time, is a 7% position in certain Ark separate accounts.

Wood said she remains “extremely bullish.”

The idea for active ETFs based on disruptive technology first occurred to Wood while she was chief investment officer for global thematic strategies at AllianceBernstein Holding LP. ETFs traded all day and their assets were transparent. Plus, they were generally lower-cost and more tax-efficient than mutual funds.

She recalls then-CEO Peter Kraus being “very suspicious.” When her pitch was rejected, Wood quit to start Ark.

“We were quite the loss-making company, and I felt it acutely since I funded most of it for the first three years,” Wood said. “We built it. They did not come.”

With no background in ETFs and only $40 million of assets after 2 1/2 years, Wood needed a partner to distribute Ark’s products. That’s how Resolute entered the picture. In 2016, it acquired a minority stake, including an option to buy control.

‘Virtuous Cycle’

Ark soon found its footing and Wood, together with her analysts, built a profile on Twitter, using it to post reports, videos and podcasts, stress test concepts and solicit feedback. She credits social media as the secret to much of Ark’s success.

“It has given us a competitive advantage because the compliance departments in other organizations will not let their portfolio managers or analysts talk about their research,” she said. “There’s a virtuous cycle at work here, and there’s also a bit of a viral network effect taking place.”

Wood said she’s confident her investments will return at least 20% annually, more than doubling over the next five years. As one of the few female CEOs in finance, Wood prizes her performance. She also points to it as advice for other women in her field.

“No one can take my track record from me, for better or worse,” Wood said. “If you build one over a long enough period of time and are successful, it’s usually a ticket to more success.”