Cathie Wood believes that if a market bubble is growing, it is being created within value stocks and not growth names.
"In our view, the real bubble could be building in such so-called "value" stocks with much higher valuations in the context of a five-year investment time horizon as opposed to last year," Cathie Wood wrote in ARK's latest quarterly report.
Wood added: "Meanwhile, the valuations of many innovation related stocks have been cut in half."
Moreover, in ARK's quarterly commentary report it also states: "In our view, long-term inflation fears are overblown because inventories are stacking up in the face of weak consumption."
It's ARK's view that the real risk to the market outlook is deflation versus inflation.
In that case, Wood and her team believe that "nominal GDP growth is likely to be much lower than expected, suggesting that scarce double-digit growth opportunities will be rewarded accordingly. Growth stocks and innovation-driven stocks could be the prime beneficiaries."
Below is Cathie Wood's six actively managed ETFs along with their YTD performance:
ARK Innovation ETF (NYSEARCA:ARKK) -20%, ARK Fintech Innovation ETF (NYSEARCA:ARKF) -18.9%, ARK Autonomous Technology & Robotics ETF (BATS:ARKQ) -12.4%, ARK Next Generation Internet ETF (NYSEARCA:ARKW) -18%, ARK Genomic Revolution Multi-Sector ETF (BATS:ARKG) -21.6%, and ARK Space Exploration ETF (BATS:ARKX) -9.9%.
In other ARK-related news, Tesla lost its top-weighted position inside of Cathie Wood's ARK Next Generation Internet ETF.