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Cathie Wood’s Ark Investment Management is launching its first three active exchange traded funds in Europe, courting a new continent of investors after a run of poor performance and outflows in the US.
The investor known for highly concentrated and volatile portfolios capable of massive gains and losses planned to bring her flagship strategy to several European exchanges starting on Thursday, Ark said in a statement.
The migration to Europe comes as Ark has lost market share in the $8.9tn US ETF market over the past 12 months. Investors have pulled about $2.7bn over the same period, including more than $1.8bn in outflows the first three months of 2024, according to data from Morningstar.
Wood, Ark’s founder and chief executive, cited years of interest from potential investors across the Atlantic Ocean as she seeks to make her mark in the $2tn European ETF market.
“Over the past decade, a substantial portion of our website traffic, subscriber base, inbound requests, and social media traffic have come from people in Europe — a clear signal of the strong interest and demand for Ark’s investment strategies within the European market,” Wood said in a statement. The launch was a “declaration of our long-term commitment” to the continent.
Counterparts to her US Ark Innovation and Ark Genomic Revolution ETFs, as well as a third strategy “tailored specifically for the European market” focusing on artificial intelligence and robotics, are expected to start trading in Germany on Thursday followed by debuts on exchanges in the UK, the Netherlands, Switzerland and Italy, Ark said.
The new products follow Ark Invest’s purchase last year of Rize ETF, since rebranded Ark Invest Europe, in a bet on European demand for thematic ETFs, such as Wood’s.
Ark’s flagship Innovation ETF soared more than 150 per cent in 2020, a level of performance that beat virtually every other competitor and put the firm on the map. The fund held about $2bn in assets at the start of 2020 but took in nearly $8bn in net new flows over the second half of that year, ending 2020 with more than $17bn in assets, according to Morningstar Direct.
The fund dropped 23 per cent and 67 per cent in 2021 and 2022, respectively, before returning with a 68 per cent gain in 2023. It is down nearly 17 per cent since January 1 as top holding Tesla has fallen about 37 per cent this year.
Announcing the debut of Ark’s European funds, Wood asserted that the Innovation fund strategy is “engineered to benefit from an impending economic transformation that we believe will surpass the historical milestones of the first and second industrial revolutions”.
Morningstar strategist Robby Greengold earlier this month pointed to the “compelling” nature of the themes that the Innovation fund invests in — artificial intelligence, blockchain technology, genetic technology, energy storage and robotics — but questioned Ark’s ability to find winners and losers within those spaces.
“This fund mostly sails the rough seas of early-stage firms,” Greengold wrote for Morningstar. “They often promise rapid top-line growth, but also scant earnings and uncertain futures; results range from tremendous to horrendous. Successfully traversing such terrain demands forecasting talent, which Ark Investment Management lacks.”
Morningstar earlier this year estimated that Ark had wiped out about $14.3bn in wealth over the past decade, more than any other fund family.
Outflows from Ark have continued despite its launch of one of the first spot bitcoin ETFs in the US in January, a product that has amassed about $2.7bn in total assets over its first three months thanks in part to a roughly 37 per cent jump in the price of bitcoin this year.
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