ARK Invest Management debuted its second new ETF of the year on Wednesday, aiming to track companies with a high level of transparency around their actions.
The ARK Transparency ETF (CTRU) launched on the Cboe Global Markets Wednesday with an expense ratio of 0.55%, making it the second-cheapest fund in the ARK lineup.
CTRU tracks approximately 100 companies that rank high on a proprietary scoring system from index provider Transparency Invest. Firms get boosted in Transparency Invest’s rankings for having shorter terms and conditions pages and fewer lawsuits, or posting full costs of items and services on their sites and scoring higher on corporate reputation rankings.
The index rebalances quarterly, and companies with less than $1 billion in average market capitalization and less than 200,000 shares in average daily volume over the quarter are disqualified.
The index also has several industry screens commonly found in ESG ETFs. Fossil fuels producers, mining firms, alcohol and tobacco makers, and gambling companies are disqualified from the index, as are banks and confection makers.
That produces an index heavily weighted toward information technology companies, which hold 41% of the index weight. Tesla and Chipotle are the only nonsoftware firms in the top 10 holdings.
(Use our stock finder tool to find an ETF’s allocation to a certain stock.)
CTRU’s launch comes during a rough year for Cathie Wood’s lead funds like the ARK Innovation ETF (ARKK) and the ARK Genomic Revolution ETF (ARKG). Those funds posted respective returns of 155% and 181% in 2020 and generated a cult following for Wood’s actively managed disruptive innovation investment thesis.
However, ARKK is down 20.6% this year, and ARKG is down 33% after a downturn in July, and investors are jumping ship. While ARKK has a little more than $5 billion in year-to-date inflows and ARKG has $1.6 billion in assets year-to-date, the funds have seen outflows of $655 million and $2 billion, respectively, since March.