Cathie Wood Sees Revival of Thematic Investing When Fed Cuts Rates
PATRICK T. FALLON/AFP/Getty Images Cathie Wood Investment>ETFs Cathie Wood Sees Revival of Thematic Investing When Fed Cuts Rates If the Fed cuts rates in 2024, "we're ready for prime time," Cathie Wood says. (Bloomberg) -- Investors will flock to funds focusing on buzzy themes when the Federal Reserve cuts interest rates, according to Cathie Wood, who is doubling down on innovative investment strategies with a new acquisition.
The founder of ARK Investment Management — which purchased fellow exchange-traded fund issuer Rize ETF Limited in a big push into Europe’s nascent market for trend-driven investing — says the central bank could start cutting rates in 2024, which will work in favor of the types of strategies she has preferred over the years.
“I think we’re on the other side of that massive interest-rate increase, which did destroy a lot of performance,” Wood told Bloomberg TV on Wednesday. “That’s the most important thing. And we’re ready for prime time.”
Read more: Cathie Wood’s Ark Buys Rize ETF in Big Bet on European Growth
While Wood acknowledged that her ETFs struggled last year as central banks across the globe raised interest rates to fight inflation, the majority of funds in her suite have posted double-digit returns so far in 2023. The ARK Innovation ETF (ticker ARKK), which is her flagship fund, has advanced roughly 33% this year. The ARK Next Generation Internet ETF (ARKW) is up 46%.
“If anything, innovation gains traction during tough times,” she said. “The reason our portfolios are outperforming this year — and they are — is because they are gaining share in what is becoming a difficult environment. One by one, we’re going to earn our way back — and it’s all about revenue growth, margin expansion.”
During the Wednesday interview, Wood also said that United Auto Workers strikes can be a positive development for Tesla Inc., a core ARK investment. The electric-vehicle maker is the top holding in ARKK, according to data compiled by Bloomberg.
Read more: UAW Eyes Next Strike Targets as Parts Shortages Begin to Hit
While there’ll likely be more production shortfalls, Wood said that consumer preference is shifting toward electric vehicles whose prices have been falling.
“Tesla is leading that price decline, simply by passing cost declines onto its customers. I think that’s what’s good for Tesla,” she said.
--With assistance from Tom Keene, Jonathan Ferro and Katie Greifeld.
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Originally posted on: https://www.wealthmanagement.com/etfs/cathie-wood-sees-revival-thematic-investing-when-fed-cuts-rates