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Ark Invest

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ARK Investment Management LLC (commonly referred to as "ARK" or "ARK Invest") is an American investment management firm based in St. Petersburg, Florida, that manages several actively managed exchange-traded funds (ETFs).[3] It was founded by Cathie Wood in 2014.[4][5] At the height of February 2021, the company had US$50 billion in assets under management.[6] As of October 2023, assets had dropped to $6.71 billion, after a period of poor performance.[7]

ARK Investment Management LLC
Company typePrivately held company
IndustryAsset management
Founded2014; 10 years ago (2014)
FounderCathie Wood
HeadquartersSt. Petersburg, Florida
Key people
Cathie Wood, CEO
ProductsExchange-traded funds
AUMDecrease $6.71 billion [1]
Owner

Number of employees
45 [2]
Websiteark-invest.com

History

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In 2014, after Cathie Wood's idea for actively managed exchange-traded funds based on disruptive innovation was deemed too risky by AllianceBernstein, where she was chief investment officer of global thematic strategies, she left and founded Ark Invest. The company is named after the Ark of the Covenant.[8] Wood, a devout Christian, was reading the One-Year Bible at the time of founding.[8] It is also a backronym for Active Research Knowledge.[9][10]

In October 2014, the company launched its first four active funds: the Innovation ETF, the Genomic Revolution ETF, the Next Generation Internet ETF and the Autonomous Technology & Robotics ETF. These were followed by the Fintech Innovation ETF in 2019 and the Space Exploration & Innovation ETF in 2021.[11][12]

In 2017, Nikko Asset Management acquired a 15% stake in ARK following the success of a Global Fintech Equity Fund it partnered with ARK to launch in 2016.[13][14] As part of the deal, Nikko has exclusive rights to offer ARK products and investment strategies in Japan and the broader Asia-Pacific region.[14]

The company also maintains two index funds: the 3D Printing ETF, launched in 2016, and the Israel Innovative Technology ETF, launched in 2017. It formerly maintained the Transparency ETF, launched in 2021.[15][16] In July 2022, ARK announced that it would shutter the Transparency ETF (CTRU), effective July 31, 2022, after it was notified that Transparency Global would stop calculating the Transparency Index.[17]

In November 2020, Resolute Investment Managers announced it would exercise its option to acquire a majority stake in the company.[18][19][20] However, in December 2020, Cathie Wood repurchased the option, maintaining control of the company, while continuing to use Resolute's distribution services, obtaining financing from Eldridge Industries.[21][22] Resolute Investment remains a minority shareholder.[23][24]

In December 2020, the Innovation ETF became the largest actively managed ETF, with $17 billion in assets under management and a 170% return in 2020.[25][26] On January 11, 2021, the company became one of the top 10 issuers of exchange-traded funds.[27]

In June 2021, the firm filed to create a bitcoin ETF under the ticker ARKB, pending approval of the SEC, which had yet to approve any ETF based on the asset.[28] They re-filed to launch the spot bitcoin ETF in the US on April 25, 2023; it was approved on January 10, 2024, and began trading the following day.[29][30]

In October 2021, the firm moved its office from New York City to St. Petersburg, Florida.[31]

Investment strategy

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ARK Invest focuses on investing in disruptive technology.[32] These technologies include artificial intelligence, DNA sequencing, CRISPR gene editing, robotics, electric vehicles, energy storage, fintech, 3D printing and blockchain technology. It has also invested in cryptocurrencies. The company invests in stocks it projects to double in value over a five-year period.[33]

On November 22, 2022, Cathie Wood stated her $1 million bitcoin price by 2030 during an interview on Bloomberg TV. On that date, November 22, 2022, Bitcoin closed at $16,174; so, Bitcoin's price must increase 61 fold over the next 8 years to reach the $1M price target.[34][35][36]

From 2014 to 2021, the ARK Innovation ETF averaged an annual 39% return on investment, over three times the return of the S&P 500 during that time.[37] Street.com published on December 9, 2022: "Ark innovation ETF has dropped 63% so far in 2022 and is down 78% from its February 2021 peak. Wood has defended her strategy by noting that she has a five year investment horizon."[38]

As its funds cannot hold cash, the firm also invests in numerous Big Tech stocks it refers to as "cash-like innovation stocks".[39]

ARK publishes current analyses, transactions and portfolios, and also opens its research reviews to the public. In addition to financial analysts, ARK employs scientists and computer scientists, believing they can better assess the impact of disruptive technologies.[40][41][42] Most of the company's analysts are millennials without prior Wall Street experience.[43]

Risks

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Critics such as James Grant and Jason Zweig warn that investors chasing outsized returns by investing in ARK ETFs may be disappointed, as "hot" funds and thematic ETFs generally cannot sustain their performance.[37]

The flagship ARK Innovation ETF has received accolades for its performance in 2017, 2020 and 2023, but is also considered by Morningstar to be the third highest "wealth destroyer" investment fund from 2014–2023, losing US$7.1 billion of shareholder value in ten years.[44] The ARK Innovation ETF was down 24% for the year 2021.[45] The Short Innovation ETF launched in November 2021 as the first ETF in the United States to provide inverse exposure to another ETF, using swap contracts to provide returns on a single-day basis inverse to the ARK Innovation ETF.[46]

Morningstar noted concerns over ARK's sizable ownership in several of its smaller holdings.[47][48]

Funds

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ARK Invest managed or manages the following exchange-traded funds:[49]

Fund name Ticker Type Created
Innovation ETF NYSE Arca: ARKK Active 2014
Next Generation Internet ETF NYSE Arca: ARKW Active 2014
Genomic Revolution ETF CBOE: ARKG Active 2014
Autonomous Technology & Robotics ETF CBOE: ARKQ Active 2014
Fintech Innovation ETF NYSE Arca: ARKF Active 2019
Space Exploration & Innovation ETF CBOE: ARKX Active 2021
The 3D Printing ETF CBOE: PRNT Index-based 2016
Israel Innovative Technology ETF CBOE: IZRL Index-based 2017
Transparency ETF CBOE: CTRU Index-based 2021 (closed 2022)
Bitcoin ETF CBOE: ARKB Index-based 2024

In September of 2022 ARK launched the ARK Venture Fund,[50] a venture capital investment fund which is separate from their exchange-traded funds.

References

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  1. ^ "ARKK Total Assets Under Management". ycharts.com. Retrieved October 4, 2023.
  2. ^ "Meet the ARK Team". ark-invest.com. Retrieved October 4, 2023.
  3. ^ Schatzker, Erik (December 18, 2020). "Tesla, Bitcoin Bull Cathie Wood Targets 20% ETF Returns". Bloomberg News.
  4. ^ Fitzgerald, Maggie (December 23, 2020). "Cathie Wood's ARK Innovation becomes largest actively managed ETF, amid 170% 2020 return". CNBC. Archived from the original on January 19, 2021.
  5. ^ Cuccinello, Hayley C. "'Go For It': America's Richest Self-Made Women On Founding Businesses After 40". Forbes. Archived from the original on January 19, 2021.
  6. ^ Ballentine, Claire (February 5, 2020). "Cathie Wood Amasses $50 Billion and a New Nickname: 'Money Tree'". Bloomberg News. Archived from the original on February 19, 2021.
  7. ^ Agnew, Harriet (December 21, 2022). "Cathie Wood's Ark sheds almost $50bn in assets since 2021 peak". Financial Times. Retrieved March 5, 2024.
  8. ^ a b So, Dorothy (March 3, 2021). "Cathie Wood: religious, Reddit hit, Trump supporter? Meet Ark Invest's rock star stock picker who even has her own merchandise". South China Morning Post.
  9. ^ "FAQs". Ark Invest.
  10. ^ Norton, Evie Liu and Leslie P. "ARK's Cathie Wood Disrupted Investment Management. She's Not Done Yet". www.barrons.com. Retrieved April 22, 2021. "Wood named it for the Ark of the Covenant, a chest that in Jewish and Christian tradition holds the tablets bearing the Ten Commandments, although she told clients later that it was an acronym for Active Research Knowledge."
  11. ^ "ARK Investment Management Launches Two Additional Thematic Active Equity ETFs" (Press release). PR Newswire. October 31, 2014.
  12. ^ Best, Paul (March 30, 2021). "Cathie Woods' Ark Investment launches Space ETF". FOX Business.
  13. ^ "Stefanie Drews president of Nikko Asset Management discusses ETFs and their 10-year growth plan on ETF TV". ETF TV. Retrieved May 6, 2024.
  14. ^ a b Appell, Douglas (August 4, 2017). "Nikko Asset Management takes 15% stake in ETF boutique ARK Investment Management". Pensions and Investments. Retrieved May 6, 2024.
  15. ^ "ARK Investment Management Launches The 3D Printing ETF (PRNT) On The BATS ETF Marketplace" (Press release). PR Newswire. July 19, 2016.
  16. ^ "ARK Launches 'Transparency' ETF". www.yahoo.com. Retrieved December 9, 2021.
  17. ^ Bell, Heather. "ARK to Close Transparency-Themed ETF". Yahoo! Finance. Yahoo. Retrieved December 15, 2022.
  18. ^ "Resolute to take majority ownership of ARK Investment Management". Pensions & Investments. November 13, 2020. Archived from the original on February 4, 2021.
  19. ^ Ballentine, Claire (November 16, 2020). "Cathie Wood's ARK Invest Rocked as Shareholder Seeks Control". Bloomberg News.
  20. ^ Liu, Evie (November 18, 2020). "Cathie Wood Might Lose Control of ARK, the Company She Founded". Barron's. Archived from the original on December 30, 2020.
  21. ^ Ballentine, Claire (December 28, 2020). "Cathie Wood Buys Back Option That Had Threatened Control of Ark". Bloomberg News. Archived from the original on December 29, 2020.
  22. ^ Liu, Evie (December 30, 2020). "ARK Founder Cathie Wood Will Retain Control of the Firm". Barron's. Archived from the original on January 15, 2021.
  23. ^ Fox, Matthew. "Cathie Wood retains majority ownership of ARK Invest following bid for control by minority shareholder". Business Insider. Archived from the original on February 4, 2021.
  24. ^ "ARK Investment Management and Resolute Investment Managers Reaffirm Long-term Partnership" (Press release). Business Wire. December 28, 2020. Archived from the original on January 28, 2021.
  25. ^ Fitzgerald, Maggie (December 23, 2020). "Cathie Wood's ARK Innovation becomes largest actively managed ETF, amid 170% 2020 return". CNBC. Archived from the original on January 19, 2021. Retrieved January 20, 2021.
  26. ^ Ballentine, Claire; Greifeld, Katherine (December 11, 2020). "Cathie Wood Takes Crown From JPMorgan for Largest Active ETF". Bloomberg News. Archived from the original on January 28, 2021.
  27. ^ Ballentine, Claire; Raimonde, Olivia (January 11, 2021). "Cathie Wood's ARK Joins Top 10 ETFs With Tesla-Heavy Fund". Bloomberg News. Archived from the original on January 29, 2021.
  28. ^ Fitzgerald, Maggie (June 28, 2021). "Cathie Wood's Ark Invest to create a bitcoin ETF under the symbol 'ARKB'". CNBC. Retrieved August 11, 2021.
  29. ^ "ARK 21Shares Bitcoin ETF Application - ETF Details". en.coinotag.com. August 31, 2023. Retrieved October 4, 2023.
  30. ^ Sahadi, Jeanne (January 10, 2024). "SEC gives bitcoin ETFs the green light | CNN Business". CNN. Retrieved January 11, 2024.
  31. ^ Charles Riley (October 7, 2021). "Cathie Wood's Ark Invest is quitting Wall Street and moving to Florida". CNN. Retrieved October 9, 2021.
  32. ^ "The Best Stock Picker of 2020 Wins With Disruptive DNA". Bloomberg News. December 31, 2020.
  33. ^ Volatility, Skepticism, Retail vs. Institutional Investors | ITK with Cathie Wood, retrieved April 3, 2021. Event occurs at 1:21.
  34. ^ "Bitcoin Price". Markets Insider. Insider Inc. Retrieved December 15, 2022.
  35. ^ "Why Cathy Wood Trusts Crypto Despite FTX Collapse". Bloomberg.com. Bloomberg L.P. Retrieved December 15, 2022.
  36. ^ "Bitcoin Price". Markets Insider. Insider Inc. Retrieved December 15, 2022.
  37. ^ a b Zweig, Jason (February 5, 2021). "Cathie Wood Has Wall Street's Hottest Hand. Maybe Too Hot". The Wall Street Journal. ISSN 0099-9660.
  38. ^ Weil, Dan. "A Look Back at Cathie Wood's Disastrous Year". TheStreet.com. The Arena Group. Retrieved December 15, 2022.
  39. ^ Stevens, Pippa (May 7, 2021). "Cathie Wood loves the setup for her stocks after sell-off, expects big returns from her strategies". CNBC. Retrieved August 11, 2021.
  40. ^ Ballentine, Claire (September 26, 2020). "Secret Sauce Behind ARK's Success Is Cathie Wood's Diverse Team". Bloomberg News. Archived from the original on November 20, 2020.
  41. ^ "ARK Investment Management LLC Celebrates Five Years Of Disruptive Innovation Investing" (Press release). PR Newswire. January 24, 2019. Archived from the original on February 4, 2021.
  42. ^ Alster, Norm (October 8, 2020). "A New Kind of Fund That Is Stingier With Information". The New York Times. ISSN 0362-4331. Archived from the original on January 29, 2021.
  43. ^ Liu, Evie (March 8, 2021). "ARK's Cathie Wood Disrupted Investment Management. She's Not Done Yet". Barron's.
  44. ^ "15 Funds That Have Destroyed the Most Wealth Over the Past Decade". Morningstar, Inc. February 2, 2024. Retrieved February 8, 2024.
  45. ^ Fitzgerald, Maggie. "Sell-off in Cathie Wood's ARK Innovation fund reached 48% at low point Thursday". CNBC. Retrieved January 6, 2022.
  46. ^ Johnson, Steve; Boyde, Emma (November 11, 2021). "SARK launches as short interest in ARKK jumps to new record". Financial Times. Retrieved February 13, 2022.
  47. ^ Ballantine, Claire; Ponczek, Sarah (February 27, 2021). "Cathie Wood's Power in Some Stocks Is Even Bigger Than It Seems". Bloomberg News.
  48. ^ Johnson, Ben (March 3, 2021). "No Room on the ARK?". Morningstar, Inc.
  49. ^ "ARK Innovation ETFs". Ark Invest. Archived from the original on February 4, 2021.
  50. ^ "ARKVX Quote". www.bloomberg.com. Retrieved June 25, 2024.
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