Investors are placing large bets on a few stocks. Those who disagree claim that she's putting herself at risk.
Cathie Wood is on the hunt for the next big inventors in hot industries including robotics, fintech, and space exploration.
A high-flying, high-risk investment with huge rewards. Ms Wood's followers are ready for a wild ride in 2021.
Investing in Ms Wood's Ark Innovation exchange-traded fund paid off handsomely for investors last year. She became the Warren Buffett of momentum investing after it soared nearly 150 percent in 2020.
Sadly, this year hasn't been nearly as good to Ms. Wood as the previous one was to her.
Even while tech stocks are booming, the Nasdaq is up 18% in 2021, the Innovation ETF was down 2.5% through the end of August.
In an August interview with CNBC, Ms Wood reiterated her stance.
In addition, she is confident that the present surge will not be a rerun of the catastrophic dot-com implosion of 2000, which she believes is unlikely.
Wood told CNBC, "I do not believe we are in a bubble, as many bears believe," according to CNBC.
"It's just not possible at the moment. This is especially true when it comes to initial public offerings for small-cap companies. It is impossible for us to live in a bubble."
How Wood came up with her plan.
Clearly, Ms. Wood is speaking from experience.
Unlike millennials and Gen Z investors, she isn't solely a war narrative told by elder traders about the 2000 tech bust.
"Black Monday" of 1987 and the last major tech meltdown were all experiences that the 65-year-old has.
In the 1980s and 1990s, she worked for Jennison Associates, a Prudential-owned money manager, for 18 years. She subsequently spent 12 years at AllianceBernstein before resigning in 2013.
Her concept to develop a suite of actively managed exchange-traded funds was subsequently passed on to AllianceBernstein.
After deciding to go it alone, she founded Ark in 2014.
For her entire career, she's been observing disruptive innovation, so why not aid her own industry?, she told Forbes in 2014.
As a result of Ms. Wood's concentration on disruption, her ETF's fortunes are tied to visionary but erratic leaders.
For example, Ms Wood is a staunch supporter of Tesla and Elon Musk.
In Ark's Innovation ETF, the EV maker is the top holding by a wide margin, accounting for more over 10% of the fund's assets.
It also holds the largest holding in Ark's Autonomous Technology & Robotics and Next Generation Internet Exchange Traded Funds (ETFs), respectively.
Wood is also fine with firms such as Tesla issuing more stock to raise money for futuristic projects such as self-driving cars.
That approach raises eyebrows among some investors, who fear that new shares may devalue their current investments; nonetheless, she believes this is an overly simplistic view of the situation, particularly among Tesla haters.
According to her, "we're not fearful of diluting... provided we believe they're doing it for the right reasons." CNBC reported.
They needed to grow quickly because, if we're right about driverless vehicles, Tesla may dominate that industry, at least in America.
During an interview with Bloomberg Radio in August, Ms Wood indicated that Ark's large investment in Tesla was a bet that Mr Musk would continue to develop outside the industry of electric automobiles.
As an example, she gushed about Tesla's aspirations to create a humanoid robot.
she said. "We believe they have the pole position," she added, adding that Ark analysts were "blown away" by Musk's presentation.
It's all about the growth.
It's clear that Ms. Wood's aggressive, growth-at-all-costs investment strategy isn't for everyone.
This year, Tesla has lagged behind the larger market.
It is estimated that by 2021, shares of Teladoc, a telehealth business that was a significant winner at the outset of the epidemic, will be down more than 25%.
"Higher-valued stocks have taken a beating this year. These creative enterprises' growth, on the other hand, will be handled positively in the future, "Ms Wood made the statement during a Cboe Global Markets webcast in March.
In addition, Ms. Wood believes that investors should also invest a tiny portion of their money in bitcoin, another hazardous investment, in order to diversify their portfolio.
She also emphasized that investors need to ignore the inevitable short-term bumps that come with any asset, regardless of how stable it may seem.
Ms. Wood feels it's crucial to hold on to long-term convictions and invest for future growth.
Companies that cater to short-term investors who are looking for a quick return on their investment now invest more in stock buybacks and dividend payments than they do in innovation, she added.
They're in danger if they do that."
Investing is changing, according to a colleague of Ms. Wood's.
Too many fund managers are unwilling to look far into the future when it comes to evaluating a company's merits, instead focused myopically on the preceding and next quarterly earnings reports.
"She's been following Tesla for a while now. When she looks at it, she doesn't just see it as a car company. In no way can it be compared to traditional automakers, "Wood and Ark Invest's Ren Leggi, the company's client portfolio manager, work closely together to make investment decisions, Leggi told CNN Business in March.
Critics of Wood.
However, a rising number of skeptics believe that Ms Wood's funds could eventually collapse.
One of The Big Short's pessimistic investors, Michael Burry, has placed a short position on the Ark Innovation ETF, anticipating that it will fall dramatically.
They compare Ms. Wood to former popular portfolio managers like Kevin Landis of Firsthand Funds, Alberto Vilar of Amerindo and Garrett Van Wagoner of a popular emerging-growth fund in the 1990s.
As a result of the 2000 tech boom, several of these funds collapsed.
Mr Van Wagoner and other late 1990s computer gurus were profiled in 2010 by The Wall Street Journal under the heading "Starting with fame and fortune all the way to flaming stars. Tech-Fund Mavens and their Post-Bust Fate."
What fate awaits Wood?
Critics criticize the fact that Wood places so large bets on a small number of equities.
An ETF such as Ark Innovation has approximately half of its holdings concentrated in its top ten companies. To name a few, the firm also holds significant investments in Roku and Coinbase.
"Like Ark, we focus on technology as a way to make money. But we're different because we don't focus "On CNN Business in March, ROBO Global's Jeremie Capron spoke about his role as head of research there.
More than 80 equities are held by this ETF, with only 10 of them accounting for more than 20% of the fund's total assets.
Typically, Ark funds own shares in 30 to 50 different companies.
Ms. Wood has the final laugh for the time being.
Ark Innovation ETF dipped roughly 25 percent in 2018 before regaining 30 percent in 2019, but the fund's performance have tended to flatten out over time.
As of mid-2021, the Ark Innovation ETF has a five-year average annualised return of 48.6 percent, compared to 17.7 percent for the S&P 500.
The Ark acolytes may be willing to overlook a bad year every now and again as long as Wood continues to swing for the fences.