Every bull market seems to bring a new superstar fund manager to the forefront. During the 90s and early 2000s, Bill Miller was highly touted due to his aggressive bets on financial stocks and growth companies. Later, during the commodity bull cycle, CGM's Focus Fund, helmed by Ken Heebner, was closely watched.

Transactions and comments by these fund managers could move individual stocks, This time, is no different, as ARK's Cathie Wood has risen to prominence. There are numerous signs of her growing influence. For example, her positive comments on Editas Medicine (EDIT  ) caused the stock to spike by 50%. In terms of inflows, ARK funds are now fourth behind stalwarts like Vanguard, State Street, and MSCI.

Background

Prior to helming ARK, Wood served as the Chief Investment Officer at Alliance Bernstein. Her investing philosophy centers around finding companies using technology to disrupt different industries. She believes this strategy can deliver outperformance beyond the major averages.

Her style is the perfect match for the past decade as she's held some of the best-performing stocks like DocuSign (DOCU  ) and Tesla (TSLA  ). Additionally, many fund managers tend to lean on the conservative side so may eschew such high-flyers out of valuation concerns. Similarly, ARK is very different than most Wall Street firms. She tends to hire people outside of finance who are well-versed in technical fields. Additionally, she shares her research publicly rather than closely guarding it like most firms.

Ark Performance and Outlook

This has translated into wild success in terms of her funds' performance and inflows. It's also enabled her to launch more funds. The main fund is the ARK Innovation ETF (ARKK  ). There are also additional ETFs dedicated to specific themes - fintech, genomics, autonomous and robotics, and web 2.0.

Since its inception in 2015, the Ark Innovation ETF is up 594% which is handily beating the S&P 500's 45% gain over the same time period. YTD, ARKK is up 164%, while the S&P 500 is up 15%.

One consequence of this success is increased inflows which means the funds are deployed into their holdings. Some skeptics believe that this is creating a self-reinforcing loop. Any drop in the stocks could lead to outflows which could result in more selling in ARKK's holdings.

One reason such an event could trigger is if long-term interest rates start to move higher which would result in multiple-compression for growth stocks. Long-term rates could possibly move higher if the economy is strong in 2021 as many believe due to the vaccine unleashing pent-up demand in many sectors.