Page 32 - Investment Advisor April 2021

Cover Story

top stocks they believe are and will con-
tinue to be successful and grow for the
next five to 10 years. This includes firms
like Square, a provider of digital wallets
and payments, which represents about
5% of its Innovation ETF portfolio.
“It all starts with sizing [up] these
opportunities at the technology level,”
said Ark Client Portfolio Manager Renato
Leggi in an interview. “As we’re sizing [up]
these opportunities, we develop a forecast
or thesis around the total adjustable mar-
ket for each of these technologies, based
on our expectations of what they will look
like in five or maybe 10 years out.”
From here, the team starts the bottom- “[Wood and the Ark team] are doing what they
up process and identifies the winners in said they were going to do since they started the
each of these industry segments. But it
doesn’t take a “scattershot” approach. firm — running an aggressive high conviction
Using a scoring system with six met-
rics, Ark determines its conviction for innovation next generation economically styled
each of the top stocks in these seg- portfolio. ... It’s hard not to admire somebody
ments. It’s very committed to firms like
Tesla, which “is disrupting the internal- who calls their shot and then lands it.”
combustion [engine] traditional auto,”
adds Leggi, who joined Ark in 2018. —ETF Trends and ETF Database’s David Nadig

The Ark Method finance and economics. She was a mentee of famed economist
The staff of 29 works closely with Wood on a day-to-day basis, Arthur Laffer at the school.
he points out. Every morning, members of the investment She went on to Wall Street, where she spent 18 years
team — including Research Director Brett Winton, leader of with Jennison Associates in various roles: chief economist,
Ark’s nine analysts — meet to discuss business, as well as their analyst, portfolio manager and director. When she moved to
research findings and stock updates. AllianceBernstein, she became CIO of global thematic strate-
Based on the information collected at these gatherings, gies. She started Ark in 2014 with the Innovation ETF.
Wood — who worked in the bullpen with the analysts and trad- “We wanted to dedicate a portfolio to innovation that didn’t
ers before the pandemic shutdowns — makes trading decisions exist in the marketplace,” she told Benzinga. “Again, innova-
as the traders listen in. tion was out of favor. It was too volatile. In fact, when we
Friday “is when it all comes together in what we call our started the firm in 2014, it took a lot to get people’s attention,
brainstorming session,” Leggi explained. The meeting is led by because they thought we were too risky, too crazy. And I see
Winton and features each analyst’s research breakthroughs for now it’s coming full circle, because I hear that again.”
the week. The event includes about 80 invited guests, such as Arnott says this approach allows Wood to “really [be] able
academics, early-stage venture capitalists and entrepreneurs to tap into market trends and be at the right place at the right
(some of whom are building the types of technology that Ark time. There’s definitely a momentum element in her strategy,
invests in). Everyone contributes to the discussion. but she’s not just buying the same stocks as everyone else.”
“It is very helpful in the ideation process, and [guests] pro- Ark’s long-term view also sets it apart, Wood explained to
vide different vantage points [vs.] what we’re looking at from a Raznick: “If you talk to most analysts and managers, they’re
research perspective,” Leggi said. “Those are valuable insights really focused on the next year or 18 months in terms of guid-
our analysts can [use].” ing their buy-and-sell decisions. We are not. In fact, we want
our companies to sacrifice short-term profits to be in the pole
Wood’s Roots position to win [long term].”
The daughter of Irish immigrants, Wood graduated from This long-term horizon means its Innovation ETF has been
University of Southern California in 1981 with a degree in able to hold onto its holdings since the fund launched. “Even

30 INVESTMENT ADVISOR APRIL 2021 | ThinkAdvisor.com