00:00Let's start with your holdings in your venture fund, because I'm taking a look.
00:03It looks like your second biggest holding is SpaceX, of course, as we know.
00:08That is a private company, one of Elon Musk's companies.
00:12Right now, in talks to potentially merge with XAI and in talks potentially to IPO later this year.
00:19I mean, as you digest these news events, how are you feeling about your current slice in SpaceX,
00:24which I believe is about 7.5% of this fund?
00:27Yes, we're feeling great, especially the rumors are.
00:33We have no idea if it will go out at 1.5 trillion.
00:37Again, rumors, rumors.
00:39But SpaceX has big ideas, orbital data centers being the latest.
00:46And XAI, which we also own in ARKVX, is going to become a part of this ecosystem.
00:56We do believe, and I think we're getting more information now, that this is becoming more and more likely.
01:04So when SpaceX does make its debut on the public markets, when it lists, when it IPOs, what does that do to your fund?
01:11How do you respond to that?
01:13Yes, the wonderful thing about ARKVX and interval funds generally in terms of the way we've constructed this one is that it's 20%, roughly 20% public, 80% private.
01:31And when SpaceX goes, we will obviously bump up the public position, but we don't have to sell it.
01:41Now, it would be unusual if all of these names, SpaceX, Anthropic, XAI, if they all were to go public, yes, we would want to diversify into more private names.
01:56We don't have to sell right away.
01:58Now, the other thing that our companies really like is that they can see we have $30 billion of assets under management, and most of those are in the public equity market.
02:14So we will be feeding these names into our ETFs as time goes on.
02:22So, Kathy, let's talk about this conundrum, right?
02:25This is one of the most fascinating topics to me that I'm writing about.
02:29You've got all these stocks.
02:30You have $500 million.
02:31Meanwhile, there's been three ETFs that have sort of, I don't know, been the rules or whatever, but they've added privates into their fund.
02:38XOVR, immediately $1.5 billion.
02:41A CraneShares ETF has two privates.
02:43And then Ron B added 22% of SpaceX, and immediately assets jumped 50% in a week.
02:49Clearly, the demand is to get this in the ETF format, but it's not the right format.
02:55How is this going to play out?
02:58It's going to be very interesting.
03:00Eric, thank you for doing the research on this.
03:04And this space is moving very quickly.
03:07The reason we chose the interval fund format was we could have more than 15% of our fund in illiquid assets.
03:19Now, it may be that the definition of illiquid is changing.
03:24I know we actually have gone to some of our private companies, the ones in the interval fund, saying,
03:31hey, we'd love to add you into our ETFs because we think this is such an important story.
03:40All we do is focus on disruptive innovation.
03:43You are one of the biggest disruptors, let's just say SpaceX.
03:47And what we found over time is that they have been reticent.
03:53So something is changing here, Eric, and it would be very interesting to get to the bottom of it.
03:59The SEC, of course, is deregulating.
04:03So that could be part of it.
04:06Secondary markets are beginning to grow, meaning private shares on secondary markets.
04:13So there's access there.
04:15So maybe this definition of illiquid or less liquid is changing here.
04:23Yeah, our understanding and Bloomberg Intelligence's understanding, Kathy, is that basically Barron classified their SpaceX holdings as less liquid rather than illiquid.
04:35And as we were talking about, we're learning that that comes from the issuer rather than the SEC.
04:41But you also make another interesting point when it comes to the private companies themselves, maybe being a little bit reticent to be in a vehicle such as an ETF.
04:48Of course, we talk about it from the issuer perspective all the time.
04:51So interesting to hear it from the perspective of the companies.
04:55But you mentioned that, you know, when it comes to going ahead of that 15 percent cap in an ETF, that that's not something that you necessarily want to do.
05:04But have you thought about adding perhaps less than that, you know, in the realm of five to 10 percent into an ETF?
05:12Yes, we certainly have thought about it so much so that we've gone to the companies.
05:18And as I said there, at least when we went to these companies, there was some reticence because there in in the worst case, let's just say black swan.
05:31When the public markets go down dramatically, these these private positions are not marked to market every day.
05:40They could end up easily well above 15 percent.
05:45And then what what would a fund be faced doing trying to find a secondary market?
05:52Now, maybe the secondary markets are becoming more liquid themselves.
05:56They're they're much more liquid today than they were when they first started, maybe five, six, seven years ago.
06:03So we've been, I would say, from a compliance point of view, very careful.
06:08And then, you know, our market makers are also trying to figure out what to do with this.
06:14How do they price in real time when at any minute something crazy could happen coming from one of these private companies?
06:25So there there there's there are some ecosystem challenges here.
06:30Some ecosystem challenges.
06:31And it's something that we will be watching for.
06:33Certainly, it's an involving story, Kathy.
06:36I do want to get your take on what a lot of you are calling the debasement trade, the effort to diversify beyond the U.S.
06:42dollar and U.S. dollar assets, moving to other assets like precious metals, specifically as a hedge against the dollar.
06:49What's different this time around from what we saw last year is that crypto is not part of this.
06:54It's not getting the bid from folks who are looking to diversify, who believe in this debasement idea.
07:00How do you think about that?
07:03A couple of thoughts.
07:06I've been writing a lot about it recently.
07:08I think if you look over time, if you look for the last five years and you do a correlation between gold and Bitcoin, you'll find very little correlation at all.
07:23What you will see, if you look back a little further, the last two major cycles for Bitcoin were preceded by the gold price increasing first.
07:35Now, I think what's going on, this so-called debasement trade, if I can just back up a little bit, I think is misplaced, and especially when we think about the dollar.
07:49If you put the dollar into perspective, you will see that over the years and in recent years, it's toward the higher end of its range against other currencies.
08:01And we think that the combination of deregulation here in the United States, big tax changes, especially for corporations, and very business and capital friendly policies here in the United States, we think because of those, the returns on invested capital in the United States are going to go up relative to those elsewhere in the world.
08:24And this, we think, is because Trumponomics, if you want to call it that, is like Reaganomics on steroids.
08:35If you look at what happened to the dollar under Reagan, it doubled.
08:39It nearly doubled.
08:41So much so, and so quickly, that we ended up in the Plaza and Louvre Accords to try and get it down.
08:48So I think it's a little misplaced.
08:51Kathy, we had Todd Stone.
08:54Thank you for explaining that, by the way.
08:55We had Todd Stone of Strategas on with us last week, and he was talking about the key man risk idea for funds that are tightly tied to their star managers.
09:04And you're nothing if not a star manager.
09:06Take a listen to what Todd said.
09:08Think of ARK.
09:10Kathy Wood is ARK.
09:11She's the face of that company.
09:12What happens when Kathy says, you know what, I'm moving on or whatever it might be.
09:15This is going to be really interesting over the next 30 years of all these established players coming into the ETF market,
09:20and you're going to lose these key man, key woman risks up there.
09:24Key woman risk.
09:25I'm just curious about the state of your succession planning over at ARK Invest.
09:30If one day you want to move on to do something else.
09:34Oh, my goodness.
09:35I can't imagine that day.
09:37Let's just say that to start.
09:38But we have a very firm succession plan here.
09:44The way we've set up the firm with directors of research, chief futurists, analysts, research associates,
09:51and really the equivalent of investment committees for each of our funds.
09:57I think any due diligence effort would look at what we've done here at ARK and be pretty reassured by it.
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