Cathie Wood said that her company is testing a more aggressive strategy called “ARK on steroids.”

Cathie Wood-known for its innovative ETFs that received billions of inflows during the pandemic-said that Ark Invest is testing a fund internally by simultaneously betting on major stocks in a disrupted benchmark index. Take this strategy one step further.

“We are testing a portfolio, but it really is Ark on Steroids,” Wood told CNBC “Squeak Box” on Wednesday. Wood said she wanted to test the strategy on Ark employees, but did not disclose when the fund will be available to retail investors.

“We believe that benchmarks are significant long-term risks because they are full of value traps. These companies have done well in history, but will be disintermediated and disrupted by the large number of innovations that are taking place,” Wood added.

Wood has long waved to the so-called value trap in the major moving averages. She classifies these companies as companies that cater to short-term shareholders by using their balance sheets to pay dividends and buy back shares. As a result, these companies did not invest enough money in innovation.

“What we have to do is to short the stocks in the big benchmarks. When we enter a risk aversion situation, portfolio managers and analysts usually run back to these stocks, get close to their benchmarks, and then sell our stocks. These are either benchmarks. A small part is either not in the benchmark. As we have experienced in the past few days, we have a good opportunity to pick these stocks because this is just a hedge to get closer to the benchmark,” she said.

With Wood’s flagship fund, Ark Innovation ETFWith a fall of nearly 15% in 2021 and a rise of 25% in the S&P 500, this new strategy may cause some major losses.

Wood admits that this new approach may be very unstable, but believes that in the next five years, as her innovative company further emerges and the old leaders gradually disappear, it will become a huge winner.

“Five years from now, the world will be completely different from today. We invest in all disruptors and winners who will disrupt the traditional world order,” Wood added.

Tesla Is the largest holding company of Ark Innovation, other names such as Coin Bank, Tradoc, Unified software, Roku with Zoom videoIn 2021, in the rotation from growth to value, Wood consolidated her most confident name. She continued to buy the defeated name down.

To provide figures for Wood’s theory, she said that innovation is currently priced in the global open market at approximately US$10 to US$15 trillion. Ten years later, disruptive innovation will account for approximately US$200 trillion of the market value.

“It will rise from just over 10% of the global stock market value to a level that we think may be more than half,” Wood said. “Thanks to DNA sequencing, robotics, energy storage, artificial intelligence and blockchain technology, this is the level of disruption that is evolving.”


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