The market has given her plenty of opportunities in recent weeks, with the tech-heavy Nasdaq Composite index dropping 10% since July 10.
Tech stocks have suffered from a pullback in artificial-intelligence mania, some corporate earnings that didn’t meet grand expectations, and concern about economic weakening.
The tech-stock drop drew Wood into the market this week.
Cindy Ord/Getty Images for Bloomberg Businessweek
Conflicting opinions about Wood
The investment community has divergent views toward the woman who may be the country’s best-known investor after Warren Buffett. Boosters say she’s a technology visionary, while detractors say she’s just a mediocre money manager.
Wood (Mama Cathie to her followers) rocketed to acclaim after a stupendous return of 153% in 2020 and lucid presentations of her investment philosophy in numerous media appearances.
Related: Cathie Wood unloads $8 million of surging tech stock
But her longer-term performance is less impressive. Wood’s flagship Ark Innovation ETF (ARKK) , with $5.3 billion in assets, produced negative annualized returns of 8% for the past 12 months, 30% for three years and 1% for five years.
That’s quite woeful compared to the S&P 500. The index posted positive annualized returns of 20% for one year, 8% for three years, and 14% for five years. Ark Innovation’s numbers also fall well shy of Wood's goal for annual returns of at least 15% over five-year periods.
Cathie Wood’s straightforward strategy
Her investment philosophy is pretty simple. Ark ETFs usually purchase emerging-company stocks in the high-tech categories of artificial intelligence, blockchain, DNA sequencing, energy storage, and robotics. Wood maintains that companies in those categories will change the world.
Of course, these stocks are quite volatile, so the Ark funds’ values frequently fluctuate up and down. Wood adds to and subtracts from her top names frequently.
Investment research titan Morningstar offers a harsh assessment of Wood and Ark Innovation ETF. Investing in young companies with slim earnings “demands forecasting talent, which ARK Investment Management lacks,” Morningstar analyst Robby Greengold wrote in March.
The potential of Wood’s five high-tech platforms listed above is “compelling,” he said. “But the firm’s ability to spot winners and manage their myriad risks is less so…. It has not proved it is worth the risks it takes.”
Related: Vanguard updates outlook for popular stocks, bonds strategy
This isn’t your father’s investment portfolio. “Results range from tremendous to horrendous” for Wood’s young, often unprofitable stocks, Greengold said.