By Suzanne McGee
(Reuters) – U.S. technology investor Cathie Wood is calling on Donald Trump’s new administration to boost economic growth and policy certainty by rolling back promised corporate and personal tax cuts to Jan. 1, 2025, she told Reuters.
Wood’s flagship exchange-traded fund ARK Innovation has lagged in recent years and is up 17% since Trump’s victory, which is expected to bring policy changes that will benefit the fund’s investments .
Two of its stocks, electric car maker Tesla (TSLA) and cryptocurrency exchange Coinbase (COIN), have already risen 54% and 7% respectively since November 6, while the S&P500 (^GSPC) is up about 1.7% in that time has increased.
ARKK’s other top holdings include Robinhood (HOOD) 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 broker deals, promote innovation in crypto and artificial intelligence, and cut red tape and government costs will make life easier for corporate America to make.
Tax policy was also at the center of the election race, with Trump promising to cut tariffs 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.
That’s 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. That would, I think, be very helpful in terms of providing certainty to the markets,” Wood said in an interview.
“If they don’t, you may be holding companies and individuals back. … I try to convey that quite regularly to anyone who will listen.”
While Wood said she is generally not in favor of 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.
Analysts expect the new Republican-controlled Congress to pass tax reforms next year, but Trump will initiate other major policies with executive orders when he is inaugurated on January 20. He has also announced new regulators who can implement his pro-innovation agenda.
Campaign finance records show that Wood did not financially support Trump during the 2024 election cycle.
She told Reuters that she has met Trump only once, earlier this year at his Florida home, but that she is in touch with Tesla boss and billionaire Trump backer Elon Musk and crypto enthusiast Republican Senator Cynthia Lummis of Wyoming, both of whom help shape Trump’s policies. .
Wood has been one of Musk’s biggest cheerleaders, investing 16% of ARKK’s $6.4 billion in assets in Tesla. That outsized bet reflects her confidence in Musk and her belief that AI, including autonomous vehicles, will be a key driver of investment returns in the future, she said.
“He understands that technologies are converging, that artificial intelligence is the biggest enabler,” Wood said.
However, she is selling some Tesla shares to reinvest in other companies that are likely to benefit from the same trend, such as Archer Aviation, a developer of autonomous aircraft.
Florida-based ARK is also a leading proponent of crypto, launching a spot bitcoin ETF in January. Wood said a crackdown on cryptocurrency under President Joe Biden has left the United States in a vulnerable position, but the new administration “doesn’t want to lose innovation to the rest of the world.”
Lummis said in a statement that working with stakeholders was a priority and that “Wood is a leader in the digital assets space and someone who has shared feedback with me on a number of issues related to innovation.”
While some of the market exuberance over Trump’s victory has dissipated, Wood said she believes the Trump bubble, which has benefited crypto, small-cap and financial stocks, will eventually spill over into a larger share of the market.
“I really think the market will continue to broaden. It will certainly drive innovation and everything that has been held back by policy in recent years,” she said.
Neither Musk nor Trump’s transition team responded to requests for comment.
Wood’s outsized bets on stocks like Zoom generated a 152% return at the height of the pandemic and earned her a huge retail investor following, but she has struggled to sustain that outperformance.
Investors have pulled about $3.5 billion from ARKK over the past two years, with $300 million of that flowing in the past month, according to data from Morningstar and VettaFi.
“That’s an atypical pattern for most ETFs and mutual funds, but typical of the contrarian pattern we’ve seen for Cathie Wood’s funds,” said Robby Greengold, a Morningstar analyst.
Wood said even the most favorable new policies won’t end that volatility.
“We tell people that we offer very differentiated exposure to innovation.” As a result, she added, “Yes, we will be volatile.”
(Reporting by Suzanne McGee; additional reporting by Douglas Gillison; Editing by Michelle Price and Mark Porter)