Ark Investment Management's active ETFs had a miserable 2021, and they're continuing their slump in the first trading days of this year. Losses for the six funds range from 4% to 9%, while the S&P 500 and Nasdaq are down just 1% and 3%, respectively, so far in 2022.
Despite CEO Cathie Wood's losses this year and last — when all but one of the six active ETFs posted losses, ranging from 7% to 24% — Wood is standing firm in her core belief that disruptive innovation technologies will underpin "exponential growth opportunities for mass markets," and the companies involved in those technologies will see their stocks soar.
At her latest monthly update webinar, Wood told attendees that the secular changes due to innovative technologies are permanent, the "real deal," different from the tech bubble more than 20 years ago.
She spoke of Zoom and Teladoc — two primary holdings in several Ark funds — as becoming top players in their respective fields of communications and health care information going forward, feeding off data about their past revenue increases and margin expansion.
Both stocks, however, have fallen more than the market year to date and lost heavily over the past 12 months — down 48% for Zoom and down 61% for Teladoc.
Wood, however, is unmoved by those declines. "Our conviction has increased in the last year. It has not decreased," she said, adding that critics of Ark say the firm doesn't understand valuation.
"We most certainly do understand valuation," Wood said, "and we assume massive multiple compression over the next five years in our strategies. … Overcoming those compressions are massive growth opportunities."
She added that her critics "don't understand technology and how powerful the trends that are emerging are."
