Andrew Michel, a 65-year-old product-marketing engineer, made a bold—many would say an imprudent—move last June. The longtime, typically conservative investor sold two-thirds of his retirement savings, which had been invested in broad-market index funds, and put the money into two red-hot ARK exchange-traded funds. Within a few months, he made enough for a down payment on a second home, in sunny Tampa, Fla. “I looked her up, and it all sounded really good,” he tells Barron’s. “I started investing with ARK just three days later.”
The “her” is Cathie Wood, who founded ARK Investment Management seven years ago, and joins our list of the 100 Most Influential Women in U.S. Finance this year. Michel’s is the sort of investor fanaticism that has made ARK a household name and Wood an unlikely celebrity. Her success seems very of-the-moment, but she has been laying the groundwork for years. She was early on many themes—she embraced active management when investing seemed inexorably tied to indexing; she implemented her stock-picking in active ETFs while the largest asset managers said it couldn’t be done; and she bought companies that others thought were overpriced, a joke, or both.
It isn’t just that ARK’s actively managed funds have done well, although they have—phenomenally so: Last year, five of its seven ETFs returned an average of 141%; three were the top performers among all U.S. funds. Wood’s rise to star-manager status is reflective of today’s zeitgeist. Some of the biggest investing stories recently—
Tesla
(ticker: TSLA), Robinhood, Reddit,
GameStop
(GME), and Bitcoin—are about outsiders upsetting the status quo.
“ARK is an outsider, too,” says John Rekenthaler, vice president of research for Morningstar. “Cathie Wood has been around, but this is a new company. There is a sense of outsmarting Wall Street, outsmarting convention.” Wood has a following on social media, which has fostered a sense of community and fandom akin to the Bogleheads or Buffett mania. The firm even acquiesced to demand for ARK merchandise (all sale proceeds go to a Covid-relief charity).
ARK has taken in $37 billion in new money since the beginning of 2020, the third-highest inflow among money managers, behind only Vanguard Group and
BlackRock’s
iShares, each of which has hundreds of funds. The firm’s flagship ETF,
ARK Innovation
(ARKK), has grown more than tenfold within a year; it now has $22 billion in assets. ARK has $47 billion in all of its ETFs combined.
Wood’s focus on innovative companies with technology to disrupt the way we live means that her portfolios are loaded with stocks that have skyrocketed—Tesla is a big…
Read More: ARK’s Cathie Wood Disrupted Investment Management. She’s Not Done Yet