Cathie Wood is not fazed with a 15% YTD decline in its flagship ETF, stating the company is testing a new investment strategy, according to a report by Markets Insider on Wednesday.
The new portfolio will simultaneously go long on disruptive stocks such as Tesla and Zoom while also shorting legacy corporations facing disruptions from new technologies.
Cathie Wood stated that the benchmarks are where the big risks are long-term due to the filling up with value traps but are going to be disrupted by innovation taking place.
Wood further stated that legacy companies have benefited from big profits for years, but rather than reinvesting the profits back, they focused on short-term investors by paying dividends and buying back stocks.
Ark Invest CEO believes that the ongoing period of deflation will be shaped by technological innovation that will leave legacy companies struggling.
The new portfolio strategy that incorporates shorting legacy companies will be piloted on its employees before launch as a public ETF for retail investors.