Page 33 - Investment Advisor April 2021

though you wouldn’t normally associate patience with this
kind of high-growth investment style, I think that has also con-
tributed to the fund’s success,” according to Arnott.
It also makes for consistency, points out David Nadig, chief
investment officer and director of research for ETF Trends
and ETF Database. Wood and team “are doing what they said
they were going to do since they started the firm — running
an aggressive high conviction innovation next generation eco-
nomically styled portfolio,” he said in late February.
This Ark process is demonstrated by moves like its purchase
of Tesla stock when the EV-maker’s price falls, for instance.
“This is not only normal, it’s literally exactly what she told you
she was going to do,” Nadig explained. “It’s hard not to admire
somebody who calls their shot and then lands it.”

Public Facing
Many industry experts say that what makes Ark different from
rivals is its transparency. Wood is vocal and open during inter-
views. She even provides investors with a blueprint of what
the firm is doing through Ark’s yearly “Big Ideas” report. Cathie Wood: A Quick Primer
“In fact, there is a website and an app (Ark Tracker) that
monitor the firm’s trades daily. Investors can also sign up for Wood is the 65-year-old mother of three children, Caitlin,
intraday trade alerts on the company’s website,” according to Caroline, and Robert, who founded her firm at age 57 after
Johnson and Blue. (Daily trading data is required of all asset working years in the financial industry, at Capital Group;
managers running actively managed ETFs.) Jennison Associates; Tupelo Capital Management, a hedge
Wood is “the best financial communicator on the Street,” fund she co-founded; and AllianceBernstein.
Nadig said. There’s nothing wrong with her openness, he adds: Her mentor and college professor at USC was supply side
“Talking your book is not a crime.” economist Arthur Laffer, best known for the Laffer Curve.
Wood is well aware that the firm gets lots of attention — The concept posits that higher income tax rates decrease
and not only from its performance. “The fact we are willing to the incentive to work and invest; it was embraced by
share our research and be vulnerable out there” gets attention, Ronald Reagan, who pushed to cut the top marginal income
she told Benzinga. tax rate from 70% to 28% during his two terms in office.
And Ark shares more than its trading moves. A year ago, it In October 2020, Wood discussed how the re-election
put its Tesla valuation model on GitHub, a community soft- of Trump would likely include further tax cuts on personal
ware building site, and had blowback because of its errors. income and capital gains and reduced regulation, while
“Guess what, there are errors in every buyside model — I a Biden victory would likely mean higher tax rates “of all
guarantee it.” Wood said. “But we are going to have fewer kinds” and more regulation. She didn’t officially endorse
errors because all the ‘kind’ people out there gave us that con- either candidate.
structive criticism … so our models probably are more robust.” Wood is a devout Christian. In a “Jesus Calling” podcast,
With its transparency and high-profile status, the Innovation she describes “being born with the gift of faith.” Wood also
ETF has been a target for short sellers. “There are a lot of said she named the investment firm she now leads after
hedge funds who are trying to either front run their trades or the Ark of Covenant because it was “founded on faith,”
kind of ride on coattails,” according to Arnott. which helped her persevere in the early years when assets
Wood isn’t worried. On a March 9 market call, she said Ark hardly grew.
wants to push its research out while it’s evolving: “We want to “I believe that in starting Ark Invest, I was fulfilling His
engage with the innovation communities.” Sharing ideas is a will for me here on Earth and that if I had not done it, that I
“win-win,” she added. “If you don’t give, you don’t get.” would have died an unhappy woman not having fulfilled my
Risk Issues promise here.”
On its website and in some recent press coverge, Wood
Although Wood recently told Benzinga that the main criticism and the firm state that the name is an acronym for Active
Ark gets is about the short-term valuations of its holdings Research Knowledge. —Bernice Napach
(which she maintains Ark is invested in for the long term),

APRIL 2021 INVESTMENT ADVISOR 31