Cathie Wooden has turn into greatest recognized for a comparatively aggressive funding philosophy. She and her group at Ark Make investments goal firms selling cutting-edge applied sciences, which deliver with them excessive dangers however the potential for appreciable rewards.
This differs from buyers like Warren Buffett, who focuses on premium shares at honest costs, or Carl Icahn, who buys giant stakes in firms to encourage adjustments within the enterprise.
Nonetheless, the investing world presents quite a few paths to success. The query at hand is whether or not Wooden’s method can work for buyers, and that requires a better take a look at her philosophy, together with the outcomes delivered.

Picture supply: Getty Photos.
The give attention to innovation
Wooden’s method stands out by specializing in firms main the best way in innovation and working exchange-traded funds (ETFs) round that theme. Admittedly, this has been a smart philosophy, as firms like Amazon and Netflix made some small buyers rich by pioneering new industries.
Wooden and her group at Ark Make investments focus particularly on 5 key areas of innovation:
Certainly, financial historical past bodes effectively for her method. If one seems to be again 100 years, improvements corresponding to the auto, airplane, and phone dramatically modified folks’s lives and made some buyers rich. At the moment’s expertise may do the identical.
Successes and failures
Wooden and her group have benefited from notable successes. Seeing the potential for blockchain early, Ark Make investments bought Bitcoin within the $250 per coin vary. At the moment, the market values every coin above $95,000.
The identical goes for early picks like Tesla, which Wooden first bought in January 2015 at a split-adjusted worth of round $13 per share. Wooden was additionally an early bull on Nvidia and started shopping for in This autumn 2016 at a split-adjusted worth of round $2.10 per share.
Each have contributed to the development of synthetic intelligence and robotics and, in Tesla’s case, power storage. Ark Make investments’s preliminary Tesla funding is up practically 2,100%, whereas its first Nvidia shares climbed by roughly 5,200%.
Nevertheless, different investments, notably these geared towards AI, haven’t essentially fared effectively. In 2022, Ark Make investments speculated that Zoom Video Communications would attain $1,500 per share by 2026. Amid gradual development, Ark Make investments later closed its Zoom place.
The corporate additionally owned greater than 21 million shares of Teladoc Well being. Now, with that inventory down round 98% from its excessive, Ark Make investments has since offered all its shares.
How Ark Make investments’s flagship fund fared
Ark Make investments’s holdings have additionally not fared effectively total extra just lately, although this was not all the time the case. In early 2021, throughout the peak of the 2020-2021 bull market, complete returns for the Ark Innovation ETF (ARKK 5.98%) had climbed by round 1,000% over the past 5 years.
Sadly, the 2022 bear market appeared to catch the corporate off guard, and the ETF by no means recovered. During the last 5 years, the Ark Innovation ETF’s complete return is down by practically 6%, and that features an 11% acquire over the earlier 12 months.
Worse, the Ark Innovation ETF has an ETF expense ratio of 0.75%, effectively above the common estimated by Constancy at 0.48%. Though buyers may overlook that expense ratio with 1,000% positive aspects, the Ark Innovation ETF is a tough promote when buyers pay that charge to lose cash.
Can buyers win with Cathie Wooden’s philosophy?
Total, the historical past of Ark Make investments appears to bode poorly for making an attempt to construct an innovation-only portfolio.
Certainly, life-changing improvements bode effectively for buyers and the general public typically. Buyers have turn into rich by shopping for into particular improvements and their corresponding firms.
Sadly, the onerous half is selecting the correct firms. Wooden and her group had nice success with Bitcoin, Nvidia, and Tesla, and will see additional success with different progressive shares sooner or later.
Nevertheless, the detrimental returns of the Ark Innovation ETF present that the seek for innovation will usually end in detrimental returns. Though buyers ought to nonetheless think about shopping for shares main the best way in innovation, going all-in on Cathie Wooden’s investing philosophy is probably not your best option.
John Mackey, former CEO of Entire Meals Market, an Amazon subsidiary, is a member of The Motley Idiot’s board of administrators. Will Healy has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Amazon, Bitcoin, Netflix, Nvidia, Teladoc Well being, Tesla, and Zoom Communications. The Motley Idiot has a disclosure coverage.