By David Randall

NEW YORK, (Reuters) – Cathie, Ark Invest’s star stock picker, spoke out in a Webinar Tuesday. She reiterated her warning about deflation being the greatest risk to the economy and financial markets in the coming year.

Wood’s $16.1billion ARK Innovation Fund is suffering from rising prices and fears of higher interest rates. The fund, which was the top-performing U.S. equity fund in 2020, has seen a 24% drop this year despite a 24% rise in the broad-based. Due to its investments in so-called “stay-at-home” stocks, the fund was one of America’s top performing equity funds in 2020. It has also outperformed positions in companies like Teladoc (NYSE 🙂 Health Inc. Zoom Video Communications (NASDAQ:) Inc, which have fallen 40% to 60% since 2021.

“We feel like we’re experiencing the same kind of naysaying right now” as when Ark previously made large bets on Tesla (NASDAQ:) Inc and bitcoin before both rallied more than 1,000%, Wood said. Wood stated that even with the stocks losses, “our confidence has grown” in our strategy.

Wood believes companies who profit from the stay-at home trend are part of the innovation category, which also includes biotech shares and Tesla. Wood stated that the evidence for stocks in innovation include signs from bond markets that inflation expectations are decreasing and a general decline of commodity prices.

Wood also stated that the U.S. will experience a slower growth rate than most economists anticipate in the next year. This is prompting an increase in innovative businesses that are able to grow regardless of economic conditions.

According to Lipper data, overall, the ARK Innovation Fund has seen investor outflows in six of the past ten weeks. The fund fell 2.4% in afternoon trading Tuesday, more than double the 1% decline in the S&P 500.