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what's you look at your funds currently what what are your biggest AI exposures if I could ask you that way uh first of all David uh thank you and I I think you're raising a very good point and and giving incredible perspective to what's going on here we have never seen concentration in the market like we're seeing today towards very few stocks in fact you have in fact if you go back to the Great Depression of uh the 1900s so 1929 um uh we are higher or we did reach a point that was higher today in terms of concentration then back there if you measure it by using a Goldman study the largest cap in the world the largest cap uh uh stock I should say in the S&P 500 uh divided by the 75th percentile stock so if you look at the bottom quartile the top stock there um an easy way at to get at concentration this um can mean one of two things either we're about to see the market broadening out dramatically uh and a a more healthy Market than concent concentration is not a good thing usually um or or um the other two times or a number of times we've seen this is right before we're going to go into a very significant correction so 1973 and 2000 uh you saw Peaks but in 1932 and 2009 you also saw Peaks like this in terms of concentration and uh the follow through there was a bull market that broadened out and benefited more stocks so uh I think that's a a great setup in terms of AI I think uh we have to look at every company through an AI lens uh because it really is going to separate the winners from losers uh and when we see such concentration um and especially the move in Nvidia so let me set this up and give you our uh experience with Nvidia we got into Nvidia in 2014 when it was on this split adjusted basis a little over $4 uh and of course today it's $1,200 we rode that stock in the flagship portfolio up to uh roughly $400 so that's a hundredfold increase and then we were saying to ourselves wait a minute if Nvidia is going to keep running like this the only reason it should deserve to do that is if it's going to benefit a lot of other companies and we began to look at what those other companies might be um now we do own Nvidia in our more specialized portfolios both well in Europe a Asia and and the US in the flagship though where the real estate is more dear and we need to be exposed to all of the Innovation platforms the 14 technologies that are evolving we did pull away and uh I suppose it was a bit of a statement but we said hey if this is not going to benefit other companies then what what is this move in Nvidia all about uh and uh and while Nvidia has has created just an incredible company all praise to Jensen Wong for seeing the future and and we and we heard him back in 2014 and rode the wave but now ai has to play out elsewhere in a very big way uh for NVIDIA and uh others to um to deserve their valuations Kathy Wood goes off and details how Nvidia has done so well for so long yet amid this euphoric rise tale of caution and speculation clouds her mind when it comes to the future of Nvidia and what we might see in 2025 according to Cathy Nvidia is by all means coming out of this a winner but there are some critical patterns that the average Nvidia holder should pay attention to and she is going to finally bring them to light whether you're a bullish believer or a bearish skeptic this Nvidia stock info is something you won't want to miss welcome back everyone to investra we want to focus here on private assets and Kathy you of course have a Arc uh V Ure fund that invests in private companies and among those uh Holdings are a couple of names that are familiar to everyone SpaceX uh epic games open AI anthropic I want to ask you about open AI because following yesterday's announcement with soft bank and Oracle forming this joint venture with an inest initial investment of hundred billion doar that company open AI just got a lot more valuable how are you thinking about how much you want to maybe not double down or increase your investment in a company like open AI well uh yes we have a a nice exposure now and uh you know it's interesting to have watched that announcement because uh we know how close Elon Musk with his xai is uh to president Trump uh and uh I think what president Trump do is doing here is spreading the wealth I mean there are some very Innovative companies uh who are going to accelerate this AI age which in itself is moving at an incredible Pace like a pace that we've never seen before uh what we're acquainting Stargate to so this is the $500 billion project uh is to uh the building out of the the highway system in the United States if you look back and and um put that investment into $ 2025 uh it's roughly the same amount uh so these are the digital highways uh that are going to transform everything they're going to transform everything and and really accelerate GDP growth in a way that I think most people do not partic uh understand right now and let's talk a little bit about rappers of course we're talking about uh the arc Venture fund it's a Clos end interval fund because you can't yet directly put private private companies private bonds private Credit in into ETF you have seen some filings come through to that effect though you think about what state street is trying to do with Apollo for example I haven't yet seen uh private assets ETF filing come from Ark though is that something that you're potentially thinking about um well right now we're very happy with the interval fund structure uh so this is a 40 act fund as well uh an interval fund allows daily inflows and quarterly redemptions up to 5% of nav that seems to be a a better wrapper I would think for uh for these public private funds uh roughly 80% of our interval fund is private 20% is public so that we can allow for redemptions and I think the most important thing about this interval fund as would be true of an ETF of course is the democratization that this is allowing uh for Venture Capital uh finally uh retail investors with uh less than I think it's I'm not going to get this exactly right but $250,000 in income per year and $1 million in net worth they have access to some of the most amazing companies in the world at much earlier stages than has been the case historically so we're we're pretty excited about this rapper since its Inception in 1999 Nvidia has astounded investors with a colossal 33500 % increase in its stock value translating to a compound annual growth rate kager of 30% yet it's not all sunshine and rainbows there have been Rocky Roads along the way markedly Nvidia has experienced four significant stock draw Downs 2001 2008 2018 and as recent as 2022 illustrating the volatile nature of the semiconductor Market it operates withi just to push back on that a little bit there's this ETF called x xov r the ER shares public private crossover it was a basically an ETF living in Oblivion doing an active strategy it changed its focus to add a little private 15% of the stock of the ETF is now SpaceX since it did that in December the flows have just came have come in gang busters it's now double your Venture fund which is been around for longer is it just the case that people want it an ETF even if the ETF trades at something like a hybrid closed then fund with premiums and discounts people just prefer that rapper does that concern you at all um I mean it doesn't concern me I think the more access to Innovation anyone offers the better for our markets and the better for for our competitive positioning uh around the world so uh it doesn't bother me it doesn't mean we won't do it ourselves and I will tell you that mutual funds many mutual funds have allocated 15% uh of their portfolios to private companies as well uh they don't disclose their Holdings at the end of every day like ETFs do so maybe they don't get as much publicity uh but this has been done before and I think as more and more people understand what our fund is and the kind of access we do have to these incredible ideas I think there's a place for both as of now we are on an upward trajectory thanks to the booming interest in artificial intelligence nvidia's operating margin has reached a whopping all-time high of 63% but as history teaches us us what goes up must eventually stabilize especially in a cyclical industry nvidia's outstanding fiscal performance today is brought into question when ju deposed with its significant Market valuation of $3.5 trillion in a price to earnings ratio nearing 54 nearly twice that of the S&P 500 index averag um just in in Market terms it's been striking that uh Nvidia shares they've been mostly sideways since the middle of last year obviously after being up thousands of percent and having these massive moves higher in profitability uh but is the market kind of questioning whether the value of nvidia's Head Start in terms of uh the processing units is uh is sustainable how do you view that yeah it is interesting that it's kind of has been going sideways uh the last few months um I think we're just waiting for the next big uh trigger you know either down or up I I frankly hope it's up and I think it you know uh this is not investment advice but uh given the level of activity you know half a trillion dollars with envidia as a key partner uh in in that endeavor uh speaks a lot you know I think you know at this point Nvidia is more Supply constraint than being able to and is unable to actually serve all their customers at this point when that will end I don't know uh but uh I personally am very bullish on the prospects of Nvidia and all the other new entrance in this space because you know we should not all give up and think that Nvidia is going to take over the world there's in a growing Market in uh trillions of dollars being invested huge opportunity for new entrance you know you mentioned I'm on the board of D Matrix uh that is a company that's creating uh much uh more energy efficient uh high performance uh inference accelerator for AI uh there will be opportunities for company like that to find their uh customer base yeah the pie um certainly seems to be growing fast enough for everybody to get some the prospect of investing in Nvidia indeed presents a classic conundrum for potential investors should one capitalize on the current AI fueled fervor or heed the historical lessons of Market cyclicality positioned as it is with a market cap of $3.5 trillion nvidia's Splendid run could face pressure if profit margins dip back to more historic Norms following the AI boom do you dare to dive onto the state-of-the-art wave or will you wait for the storm to settle the floor is your
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