Ark Invest's Cathie Wood welcomed the tumble in tech stocks - and revealed Archegos chief Bill Hwang funded the launch of her ETFs

• Cathie Wood celebrated the tech-stock slump as a chance to score higher returns.
• The Ark Invest chief said the sell-off reflected a broadening bull market.
• Wood disclosed that Archegos Capital's Bill Hwang funded the launch of her ETFs.
• See more stories on Insider's business page.

Ark Invest's Cathie Wood cheered the tumble in tech stocks, and revealed that Archegos Capital's Bill Hwang was one of her early backers, in a CNBC interview on Friday.

"I love this setup," the star stock-picker said about the sharp sell-off of Tesla, Shopify, and other holdings in Ark's exchange-traded funds. "The worst thing that could have happened to us is to have the market narrowly focus on just our ilk of stock - the innovation space."

Wood also argued that only the prices of her favorite companies have changed, not their prospects. She now expects to score compounded annual returns of 25% to 30% in her funds over the next five years, up from her target of 15% earlier this year.

The Ark chief's flagship innovation ETF is currently down 12% year-to-date, a sharp reversal from its roughly 150% gain in 2020.

Wood told CNBC about her relationship with Hwang during the interview. The pair of proudly Christian investors met through church and first exchanged ideas in 2013, and Hwang invested in Netflix after Wood recommended the video-streaming stock to him, she said.

"He did provide the seed for our first four ETFs and we're very grateful to him," Wood continued, emphasizing that Hwang's help was crucial as it was tough to secure funding for ETFs in the early 2010s.

She added that she wrote to him after Archegos blew up in March, and doesn't know whether he's still an investor in any of Ark's funds.

Archegos imploded after Hwang's aggressively leveraged bets on tech and media stocks soured. Several Wall Street banks slapped him with margin calls, declared him in default when he didn't pay up, and rushed to dump more than $20 billion of his positions in a matter of days.

Credit Suisse and Nomura were among the banks caught out by Archegos' collapse and the subsequent fire sale, and suffered billions of dollars in losses as a result.