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Cathie Wood says her ARK Innovation fund will earn 50% CAGR over next 5 years

Cathie Wood’s ETFs are down with losses so far in 2022, falling 8-25%. Cathie Wood enjoys a loyal fanbase despite the recent weak performance of her ETFs.

Cathie Wood says her ARK Innovation fund will earn 50% CAGR over next 5 years
ARK Investment has faced a lot of heat this year with many chiding Cathie Wood for the performance of her ETFs. (Image: REUTERS)

Despite being down deep in red so far in 2022 ARK Investment’s Cathie Wood remains confident that her innovation-focused ETF ARKK will perform better going ahead, expecting a 50% compound annual rate of return over the next five years. Talking to CNBC, the much-debated stock picker said that her investors understand that the firm ARK Investment may be staring at “very big exponential growth opportunities”. Cathie Wood’s ETFs are down with losses so far in 2022, falling 8-25%. Cathie Wood enjoys a loyal fanbase despite the recent weak performance of her ETFs. The ARK CEO said that this year as well ARK Investment is seeing net inflows into its funds.

Expect 50% compound annual returns

Urging investors to continue believing in her strategy, Cathie Wood highlighted that during the peak her return expectations were 15% but now those are around 50%. “Prices are now down, but our return expectations have actually gone up. Over the next five years, we are expecting a 50% compound annual rate of return,” Cathie Wood said.

She remains confident in her research and the innovation theme. Reiterating her mantra of ‘innovation solves problems’, Cathie Wood said that the world today is seeing more problems with supply chain shocks, inflation, and Russia’s invasion of Ukraine, which she believes gives the opportunity for the innovation theme. “Our ilk of stock is going to do very well, even if interest rates back-up a little more. We do believe cyclical inflation is near a peak,” she added.

“If we look at the last five years, our flagship strategy has compounded at close to mid-20% annualized rate,” the ARK Invest CEO & CIO said. She added that only 20% of all active managers in the last 10 years have outperformed. Cathie Wood highlighted that going into covid, ARK’s mantra was innovation solves problems which helped ARK zoom 360% from the trough of Covid to the peak.

Morningstar raises flag

ARK Investment has faced a lot of heat this year with many chiding Cathie Wood for the performance of her ETFs. Earlier this month, Morningstar said that ARK innovation fund was the worst-performing US equity fund in its universe of coverage during the first quarter of 2022. Morningstar has also downgraded Cathie Wood’s ETF saying it has become more vulnerable to severe losses.

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First published on: 13-04-2022 at 14:52 IST