Cathie Wood says oil's surge will drive a shift to new tech like electric cars, and she still expects Ark to see spectacular returns
- Ark Invest's Cathie Wood said the surge in oil due to the Russia-Ukraine conflict will drive a switch to tech like electric cars.
- The war will result in "a lot of demand destruction and substitution into innovation," she told CNBC on Sunday
Cathie Wood said the sharp gains in oil's price will drive a switch to new technologies like electric cars, as she predicted Ark Invest funds will see spectacular returns in the coming years.
The escalating conflict in Ukraine has driven a surge in commodity prices, as the US and its allies consider an import ban on Russian oil. The country is the third-largest exporter of crude oil and a major exporter of nickel, wheat and natural gas.
"We're going to be looking at a lot of demand destruction and substitution into innovation. Electric vehicles as opposed to gas-powered vehicles would be the biggest one," Wood told CNBC's "Capital Connection" on Sunday.
Ark Invest's flagship Ark Innovation exchange-traded fund (ARKK) has lost more than 35% this year so far, as Russia's attack on Ukraine further encouraged investors to shun high-risk assets
But Wood believes the conflict will drive tech innovation, the kind of company her funds specialize in, to solve the new set of challenges it creates.
She expects automation and electric vehicles to address issues like labor shortages and rising oil prices, for instance.
The Ark Invest CEO said she sees a similar pattern developing now as in the COVID-19 pandemic, which resulted in gains for the Ark Innovation ETF that hit a high early last year.
"We've been in a terrible bear market for innovation," Wood said.
"However, if you look from the bottom of the coronavirus to that peak in February of 2021, we were up 358%. Why? Because innovation solves problems," she added.
Ark's funds have seen significant inflows since January 17, Wood said, who believes many investors are "averaging down" — that is, they are following a strategy of buying more of an asset when the price falls
"You'd be amazed if you average down over time, how quickly a strategy can come back above that average. And if we're right, significantly above that average over the next five years," Wood said.
"Given our expectations for growth in these new technologies, I think we're going to see some spectacular returns," she added.
The star stock-picker noted that while public markets are pricing cutting-edge tech stocks lower, private markets have seen a 20% increase. She attributed this to the tendency of investors in public markets to be focused on benchmarks, which she called a massive misallocation of capital last month.
She also dismissed the role of the tech giants in the S&P 500, saying they are the successes of the past.
"Our technology stocks are going to be the future successes, and they will end up in the indexes," Wood said.