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]
On November 22, 2022, Cathie Wood stated her $1 million bitcoin price target 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
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
ARK Invest managed or manages the following exchange-traded funds:[49]
^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."
