ARK Invest has stepped away from its singular focus on disruptive innovation to make plans to launch an ETF focused on hedging against sharp market downturns. The ARK Risk Mitigation ETF (ARM) will be actively managed.
The filing does not include an expense ratio, but indicates the fund will list on the NYSE Arca.
ARM, which will be subadvised by Quadratic Capital Management, will invest in cash and U.S. government bonds, while buying and selling options on global equity indexes as needed to protect the portfolio against steep declines in global markets. According to the prospectus, the subadvisor anticipates investing less than 15% of ARM’s assets in options premiums.
The filing represents a significant departure for ARK’s lineup of ETFs, which includes six funds with more than $2 billion in total assets under management, all of which are focused on different aspects of cutting-edge technology, such as 3D printing and electric vehicles.
However, given the potential volatility investors could see in those types of investments, offering a tool to dampen risk could help the firm retain investors in its existing products in times of market turmoil.
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