Written by Susan McGee
(Reuters) – Cathie Wood, an American technology investor, told Reuters that she is calling on the incoming Donald Trump administration to promote economic growth and political certainty by postponing the promised corporate and individual tax cuts to January 1, 2025.
After lagging in recent years, Wood's flagship ARK Innovation (NYSE:) fund is up 17% since Trump's win, which is expected to trigger policy changes that will benefit the fund's holdings.
Two of its stocks, electric car maker Tesla (NASDAQ:) and cryptocurrency exchange Coinbase (NASDAQ:), are up 54% and 7% respectively since November 6, while the stock price has risen about 1.7% in that time.
ARKK's other top holdings include Robinhood (NASDAQ:) and Block, both of which could also benefit from friendlier crypto and AI policies.
Wood has publicly supported Trump's economic platform, arguing that his plan to unleash transactions, encourage innovation in cryptocurrencies and artificial intelligence, and cut red tape and government costs will make life easier for American businesses.
Tax policy has also been central to the election race, with Trump vowing to lower the rate paid by companies that make goods in the United States and extend individual tax cuts passed by Congress in 2017 that are set to expire next year.
This is a key area where Wood said she is pushing for more clarity.
“I see them saying, ‘OK, we're going to cut taxes but we're going to make them retroactive to January 1, 2025.' I think that would be very helpful in terms of providing certainty to the markets,” Wood said. interview.
“If they don't, maybe companies and individuals will have to back down. … I try to communicate that on a regular basis to anyone who will listen.”
While Wood said she does not generally support tariffs, which act as a tax increase on goods, Trump's threat to raise them on major trading partners appears to be a negotiating strategy.
Tax reform
Analysts expect the new Republican-controlled Congress to pursue tax reform next year, but Trump will initiate other major policies with executive orders when he is inaugurated on January 20. He also announced new regulators that could begin implementing his pro-innovation agenda.
Campaign finance records indicate Wood did not financially support Trump in the 2024 election cycle.
She told Reuters that she met Trump only once, earlier this year at his home in Florida, but that she is in contact with Tesla CEO and billionaire Trump supporter Elon Musk and Republican Senator from Wyoming Cynthia Lummis, both of whom are helping shape Trump's policies. .
Wood was one of Musk's biggest fans, investing 16% of ARKK's $6.4 billion assets in Tesla. She said this huge bet reflects her confidence in Musk and her conviction that artificial intelligence, including self-driving vehicles, will be a major driver of investment returns in the future.
“He recognizes that technologies are converging, and that AI is the biggest catalyst,” Wood said.
However, it is selling some Tesla shares to reinvest in other companies that will likely benefit from the same trend, such as Archer Aviation, a developer of self-driving planes.
Florida-based ARK has also been a prominent proponent of cryptocurrencies, launching a spot Bitcoin ETF in January. The crypto campaign under President Joe Biden has put the United States in a weak position, but the new administration “won't want to lose innovation to the rest of the world,” Wood said.
Loomis said in a statement that engaging with stakeholders was a priority and that “Wood is a leader in digital assets and someone who has shared feedback with me on a number of issues related to innovation.”
Although some of the market's enthusiasm over Trump's win has faded, Wood said she believes Trump's win, which has benefited cryptocurrencies, small businesses and financial stocks, will eventually spread to more of the market.
“I think… the market will continue to expand,” she said. “It will certainly favor innovation and anything that has been held back by politics in the last few years.”
Neither Musk nor Trump's transition team responded to requests for comment.
“contradictory style”
Wood's huge bets on stocks like Zoom (NASDAQ:) delivered a 152% return at the height of the pandemic and won her a legion of retail investors but she has struggled to maintain that outperformance.
Investors have pulled nearly $3.5 billion out of ARKK over the past two years, with $300 million flowing in last month, according to data from Morningstar and VettaFi.
“This is an unusual pattern for most ETFs and mutual funds, but typical of the inconsistent pattern we saw for Cathie Wood's funds,” Morningstar analyst Robbie Greengold said.
Even new, more favorable policies won't end this volatility, Wood said.
“We tell people that we offer a very distinct offering of innovation.” As a result, she added, “Yes, we will be volatile.”
