If the U.S. falls into a recession in 2023, forcing the Federal Reserve to stop hiking interest rates, that could help Cathie Wood's fund, she says.
Though it's been a less-than-rosy year for Cathie Wood's Ark Invest, she sees strength ahead for the firm's investment strategy if the U.S. does fall into a recession. The firm's flagship ARK Innovation ETF is down more than 60% on the year, underperforming the broader market. The fund consists mostly of tech names, which tend to underperform in rising interest rate environments as investors are seeing now as the Federal Reserve hikes rates to tame high inflation.
"The other reason is because our fundamentals are far superior to those of companies who are more cyclically biased," she said. "And so, we will have superior revenue growth and our cash flows will continue to increase on balance during a period like that." Biggest recession factor right now In terms of a potential 2023 recession, the biggest factor Wood sees right now is the aggressive pace of interest rate hikes to cool off hot inflation.
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