Ark Invest CEO Cathie Wood is the ultimate thematic investor. Her flagship fund, Ark Innovation ETF focuses on disruptive new technologies such as artificial intelligence (AI), autonomous vehicles, genomic medicine, molecular diagnostics, and cutting-edge medical devices. This style of investing can generate enormous returns on capital in an exceedingly short period of time. But it also tends to come with a high degree of volatility and an elevated level of risk.

Recursion Pharmaceuticals (NASDAQ: RXRX) and Exact Sciences (NASDAQ: EXAS), two of Wood's larger biopharma holdings across her family of tech-oriented ETFs, are prime examples of the pros and cons associated with thematic investing. Both of these biotechnology stocks soared earlier this year due to an abrupt shift in investor sentiment at the start of the year. But they have since pulled back in a big way in response to concerns over the global economy, lingering inflation, and elevated interest rates. 

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Source Fool.com