Cathie Wood’s Ark Investment Management is betting on a comeback after losing billions in outflows. The firm just filed for four new “buffer ETFs” aimed at limiting losses in its flagship ARK Innovation ETF (ARKK).
These products, dubbed “Diet ETFs,” offer a way to reduce downside risk while capping upside returns. Each fund will run on a 12-month cycle, kicking off in different quarters throughout the year. Ark’s is entering into a buffer ETF which is already dominated by giants like BlackRock, Allianz, and Innovator.
As per the release, these new ETFs aim to protect investors if ARKK drops as much as 50%. However, returns only kick in if ARKK rises more than 5%. It’s a conservative hedge, yet still allows some exposure to growth.
The timing of this launch is strategic as market volatility is rising, partly due to micro-economic factors and tariff policies in the U.S.
Ark Repositions Amid Heavy Competition
Besides offering protection, Ark is trying to reposition in a market now led by Bitcoin-heavy ETFs. BlackRock’s iShares Bitcoin Trust (IBIT) has pulled in over $75.5 billion since launch. With more than 700,000 BTC under management, IBIT now overshadows even the S&P 500 ETF in performance. Consequently, institutional appetite for crypto exposure is reshaping ETF demand.
Since the past few months, Ark has been actively adjusting its portfolio. It recently added over 659,000 shares of Beam Therapeutics worth $13 million. Meanwhile, trimming positions in Ionis Pharmaceuticals, 908 Devices, Roblox and Coinbase.
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