Cathie Wood, founder and head of ARK Investment Management, is known for supporting cutting-edge technologies such as AI and robotics, with most of her investments focused on U.S. companies.
But this week she took action in China, getting $2.7 million worth of Chinese tech stocks as trade tensions between Washington and Beijing showed signs of easing.
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In early April, President Donald Trump raised tariffs on Chinese goods to 145%, causing tensions between the world's two largest economies and triggering a sharp market sell-off.
Last week, the two sides reached a deal in Geneva: The U.S. would reduce those tariffs to 30% over the next three months, while China agreed to reduce its responsibility for U.S. imports from 125% to 10%.
Wood's funds had a brief bump after winning the presidency last November, but that momentum was not far away. Her flagship Ark Innovation ETF ((sheet) Amid wider market volatility, before March and April, underperformed, the S&P 500 and Nasdaq combined.
However, as of May 16, ARKK has begun to recover, showing a one-year gain of 1.32%, slightly above the S&P 500's 1.30% gain and outperforming the Nasdaq's 0.52% loss.
Wood earned an astonishing 153% in 2020, which helped build its reputation and attract loyal investors. Still, her long-term performance is skeptical of her aggressive style.
As of May 16, the Manage ARK Innovation ETF is managing $5 billion, providing annual returns for five years, at just 0.59%. By comparison, the S&P 500 index grew by 17.57% annually over the same period.
Wood’s investment strategy is simple: her ARK ETFs usually buy stocks in emerging high-tech companies in areas such as artificial intelligence, blockchain, biomedical technology and robotics.
Wood said the companies have the potential to reshape the industry, but their volatility has led to significant fluctuations in the value of the Ark Fund.
Related: Cathie Wood's Net Worth: CEO of Ark Investments
According to an analysis by Morningstar analyst Amy Arnott, an analysis by Amy Arnott shows that the Ark Innovation ETF has removed $7 billion in investor wealth in the 10 years ending in 2024. This makes it the third largest wealth destroyer among mutual funds and ETFs in Arnott rankings.
Wood said the U.S. will come from a three-year “labor recession” and enter a productivity-led recovery that could trigger a wider bull market.
In a letter from investors published on April 30, she dismissed her forecast for the 2026 recession because she expects “to be clearer on tariffs, taxes, regulations and interest rates over the next three to six months.”
“If the current tariff turmoil leads to more liberal trade as tariff and non-tariff barriers gradually decline with other taxes, regulations and interest rates, then at some point in the second half of the year, real GDP growth and productivity should be surprised at the high expectations,” she wrote.
She also brought an optimistic tone to tech stocks.
“In the current turbulent transition in the United States, we believe consumers and businesses may accelerate the shift toward technologically enabled innovation platforms, including artificial intelligence, robotics, energy storage, blockchain technology and multicomponent sequencing,” she said.
Not all investors agree with Wood's optimism. According to ETF research firm Vettafi, ARK Innovation ETF has had a net outflow of $2.01 billion in the past 12 months and has withdrawn from $208.41 million in the past month.
Wood’s Ark Autonomous Technology and Robotics ETF on May 12 ((coffin) Purchased 30,217 shares of Baidu Inc ((start) . The stock is worth about $2.7 million.
Baidu is mainly known as China's top search engine, shifting its focus to artificial intelligence and autonomous mobility difficulties. The company recently launched new AI models, the Ernie X1 and Ernie 4.5, positioning itself as competitors to Openai and DeepSeek.
This is not Wood's first step to Baidu or Chinese technology. In the early 2020s, she was optimistic about the major tech names in China and established considerable positions on Baidu, Tencent and JD.com.
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By early 2021, Ark Fund held nearly 5 million shares worth about $1 billion, reflecting her optimism about the momentum of the Chinese market and Baidu's push toward electric vehicles, a drama that echoes her long-term position at Tesla. ((TSLA) .
However, Wood's Chinese investments struggled to hit Beijing's intensified regulatory crackdown on tech companies in 2021, and she gradually reduced her stake. By the third quarter of 2022, Ark had completely left Baidu.
Wood returned to his name on March 24 this year and bought 129,451 shares, the first time she bought Baidu in two years. She added another 136,773 shares in April, followed by the latest May purchase. Baidu's share price has risen about 6% in the past month.
Wood talked about how Baidu CEO Robin Li worked hard to grow the company's autonomous driving business in a March interview with Bloomberg.
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"We recently had a conversation with Robin Li and his team, and we understand the competitiveness of the Chinese market in autonomous liquidity and large language models," Wood said.
She added: "We believe that autonomous capacity will expand globally to $8 to $100 trillion in markets over the next 5 to 10 years. If Baidu can bring any market to market even outside of China in other parts of Asia, then we don't think this is discounted in stocks at all."
Baidu stock rose 6.29% year by year.
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