Cathie Wood is the name that seems to be on every investor’s lips at the moment. But who is she? And more importantly, why are so many people keen for her to take their money? We’ll explain everything you need to know about this investing superstar.
Why might we have heard of Cathie Wood?
Cathie Wood is the latest investment manager to capture the imagination of the public and the media.
She’s been working in finance and investment since the 1980s. However, it’s her position as founder and CEO of ARK Investment Management that she has really shone.
ARK offers investors a number of different ETFs (exchange-traded funds). Last year, their flagship fund performed extremely well and became the largest actively managed ETF in the world.
What is her investing style?
Cathie Wood’s company focuses on investing in technology businesses. The aim of investing this way is to make her investors a much higher return than the market average.
This was definitely the case last year, with their main ETF returning investors a whopping 152%. Performance like this is very unusual and isn’t something investors should necessarily expect in the future.
Wood’s investing style uses a strategy called thematic investing. This just means the different funds tend to revolve around certain technology themes. Examples include things like:
- Next-generation internet
- Autonomous tech and robotics
- Fintech innovation
- Space exploration
As you can see, it’s areas that wouldn’t look out of place in a sci-fi novel.
Why has she become so popular?
Part of the reason Cathie Wood’s profile has skyrocketed is due to the fantastic returns she has been making for investors. However, it’s the way in which she invests that has caught the attention of a lot of people inside and outside the world of investing.
Wood has been outspokenly bullish about Tesla for years, almost to the point of being laughed at. The incredible performance of Tesla last year shut a lot of people up. It also proved her right to a certain extent.
Wood has a fan base similar to that of Elon Musk. She understands Bitcoin and has spoken positively about it for a long time. Regardless of where you stand on the topic, a lot of people love it. With many traditional investors avoiding cryptocurrency like the plague, Wood’s acceptance earned her admiration amongst a lot of enthusiasts.
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Is it a good idea to invest with Cathie Wood?
Regardless of an investment manager’s beliefs, they are ultimately judged on their performance. Whilst ARK has had some fantastic returns recently, it doesn’t mean that performance will continue.
The very nature of high-risk technology investments means that for every winner, you are going to get a lot of duds that go nowhere. Tesla worked out well, and Wood should be applauded for her conviction when many thought she was bonkers.
Her optimism is admirable, but it doesn’t guarantee that the rest of her investments are going to work out the same way.
Can I invest with Cathie Wood and ARK in the UK?
Unfortunately, the ARK ETFs are not available in the UK right now.
There are some similar options for investors here in the UK. The Scottish Mortgage Investment Trust (SMT) has been a high-performer for years and is focused on long-term technology investments. You can find the trust on most share dealing platforms.
Last year, SMT had a similar performance to ARK’s top fund. As mentioned earlier, past performance does not mean funds will continue with similar returns. It’s certainly been an unusual twelve months.
Another option is to research what stocks are in these funds and trusts, and build your own portfolio. This will be more work and you will need to be capable of managing things yourself. But it could be good value if you are willing to put in the effort and use a cheap share dealing account with low fees.
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