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Cathie Wood's five-year return hurdle calculator

Calculate the CAGR needed to reach a five-year target and compare it with ARK's stated 15%-annual security-selection hurdle.

Cathie Wood of ARK Invest Cathie Wood Historical strategy from 2024 Rule located in ARK Invest Europe, 2024

Portrait: Caroline Wood, CC BY-SA 4.0, via Wikimedia Commons. Self-hosted by JMM.

Interactive model

Put your numbers through the rule

The source establishes the rule. The values below belong to you, and the output is JMM's deterministic calculation.

Make the assumptions yours

Every field recalculates immediately. Changed values can be copied into a shareable URL.

Required annual return15.9%
15% hurdle path
$21,072
8% comparison path
$14,898
Gap from 15% hurdle
0.9%

The 15% line is ARK’s stated selection hurdle, not a forecast or guaranteed outcome.

Inspect the calculationThe same result in a readable record view

Required path

Annual return
15.9%
Ending value
$22,000

ARK hurdle path

Annual return
15.0%
Ending value
$21,072
Source and translation

What the source says, and what the calculator adds

Source-supported ruleARK describes striving to select companies expected to generate at least 15% annually over a five-year horizon.
JMM calculationJMM solves the CAGR required for a reader’s target and compares a 15% path with a second user-selected scenario.
Formula and methodWith no contributions, required CAGR = (target ÷ current)1 ÷ years − 1. Contribution scenarios use monthly compounding.
ARK Invest Europe Mar 14, 2024Why Active ETFs for Investing in Disruptive Innovation“Unique Investment Philosophy” section
Decision notes

What changes the answer

A hurdle is not an outcome

Expected return is an input to security selection. The target calculation shows how demanding the hurdle is without asserting it will occur.

Time horizon changes the required rate

The same target becomes much more or less demanding as the horizon changes, which is why the period stays attached to every result.

A 15% selection hurdle is a filter on what ARK buys, not a return anyone is owed.

Read the wording carefully and the claim is modest: ARK says it tries to pick companies it expects to compound at 15% or better over five years. Every active manager applies some version of that filter, and stating the number is more transparent than most. The trouble is what happens to it in public. A selection hurdle gets repeated as a fund return, and the two are not related — a manager can apply a 15% filter perfectly and still lose money, because the hurdle screens candidates and says nothing about position sizing, timing, or the price paid. JMM’s read: useful as a statement of style, worthless as a forecast, and dangerous the moment someone compounds it forward in a spreadsheet.

Written by the JMM editor. This is a view, not a recommendation for your circumstances. Who writes this

Not the calculator’s limits. The rule’s.

  1. An expected return is an input, not a result

    The hurdle describes what has to be true for a company to enter the portfolio. Whether it turns out to be true is a separate question the hurdle cannot answer and does not claim to.

  2. The hurdle has no price discipline attached

    A company can clear a 15% growth expectation and still be a poor investment at the price paid for it. Nothing in the stated rule connects the expected growth to the valuation.

Limits

What this model does not know

  • The 15% figure is a security-selection hurdle, not a promised fund or portfolio return.
  • Contributions make a single closed-form CAGR unavailable; the model solves it iteratively.
  • Volatility, loss, fees, taxes, and valuation are excluded.
Questions people ask

Before you use the result

Does ARK guarantee 15% a year?

No. The cited source describes a security-selection hurdle.

Why can the required CAGR differ from the return scenario?

One solves the rate needed for your target; the other projects the result of a rate you choose.

Take the answer further

The next question this page cannot answer

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