ARK To Close Transparency-Themed ETF

The fund’s index provider decided to halt calculation on the underlying index.

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Reviewed by: Heather Bell
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Edited by: Heather Bell

ARK announced Tuesday that it would be closing its smallest and newest ETF, making it the issuer’s first closure since launching its lineup in 2014.  

The ARK Transparency ETF (CTRU) launched in December 2021, but its last day of trading will be July 26, with creation orders halting as of the market close on Thursday.  

The pace of ETF shutdowns is accelerating this year after a slower 2021. The announcement of CTRU’s closures brings the total number expected to shutter by the end of August 2022 to 65 funds, according to data compiled by ETF.com.  

During the same period last year, there were only 37 closures completed. 2021 was the slowest year for ETF closures in roughly a decade, despite its record number of launches. ETF closures hit record levels in 2020, largely due to the pandemic-related market crash, but that took care of a lot of dead wood in the industry, resulting in the closure slowdown even as launches hit another record in 2021.  

ARK said that Transparency Global, which provides CTRU’s index, will cease calculation of the index after July 31 and cited it as the main reason for the closure, noting it could not find a “suitable solution” despite looking into other index providers.  

Usually, ETFs close because they simply haven’t gathered enough assets, and CTRU only has about $13 million after about eight months of trading, which can at least partially be attributed to recent market turmoil.  

Given that index providers are generally paid in basis points on assets under management, low assets could still be the core reason for CTRU’s closure. Transparency Global may simply not have been seeing enough profits to justify the index’s research-intensive methodology, which scores companies based on six metrics related to transparency.  

The issuer has had a rough year, with its flagship fund, the $8 billion ARK Innovation ETF (ARKK), down roughly 50% year to date. Despite ARKK’s losses in 2022, the fund is the only one in ARK’s lineup to see inflows this year, pulling in more than $1.6 billion.  

 

Contact Heather Bell at [email protected] 

Heather Bell is a former managing editor of etf.com. She has also held editorial positions at Dow Jones Indexes and Lehman Brothers. Bell is a graduate of Dartmouth college and resides in the Denver area with her two dogs.