Cathie Wood could bring her flagship $6.5bn ARK Innovation ETF (ARKK) to Europe early next year following the acquisition of Rize ETF last month.
Speaking in a virtual press conference yesterday, 5 October, Stuart Forbes, head of ARK Invest Europe and co-founder of Rize ETF, said ARKK was one of several existing US strategies that could come to the continent.
“We are actively working on bringing several of the existing active strategies to Europe,” Forbes said. “I suspect it is going to be in the new year that we will be launching. We are working very hard to deliver those as quickly as possible and we are seeing demand from Europe.
“[ARKK] is absolutely the flagship fund so it is obviously going to be a key focus for us. It is really just determining what we launch and when but ARKK is very much in contemplation.”
ARKK has experienced over $900m outflows from the turn of the year to 5 October, taking its total assets under management to $6.5bn, a dramatic fall in value from its $25.5bn peak in June 2021, according to data from etf.com.
After being celebrated as one of the winners of the pandemic-era accommodative monetary policy, ARKK plummeted 80% from its highs in February 2021 to recent lows in late December last year.
This is despite booking returns of 38.1% this year, outperforming the Nasdaq 100 which has returned 26.5%.
Despite both running thematic strategies, ARK’s active ETF focus differs from Rize ETF’s purely index-based approach, however, the newly acquired group said it was “excited” to be entering the active space.
Rahul Bhushan, head of index at ARK ETF Europe, said: “There is a big wave in Europe and that is the wave of active ETFs. The objective is to be one of the early entrants in that space.
“We have been working on the products and we are looking forward to launching them as soon as the regulator gives us the green light.”
Forbes added the active approach of ARK Invest will allow it to be more “explicit” in its approach to ESG, an area Rize ETF had previously been more focused on than its new owners.
“You should expect to see a bit more explicitness in the approach to ESG and controversies in the strategies that we are bringing to Europe and the active funds that we will be launching,” he said.
Using Wood’s star power, the group hopes the burgeoning European retail market will help drive its growth in Europe, but said primary asset raising will come from professional investors “for the foreseeable future”.
Wood said there are many similarities between the client base of Rize ETF and ARK Invest, estimating that roughly 75-80% are professional investors – or what Wood describes as “gatekeepers” to retail – from large institutions.
She added the business had also institutional clients in separately managed accounts.
“It is interesting how similar our client bases are. Young people and direct-to-consumer are one go-to market strategy for us, but the bulk of our assets, just like ARK Europe's, has a gatekeeper,” Wood said.
Furthermore, she did not rule out a move into the crypto exchange-traded product (ETP) market in Europe, noting its partnership with 21Shares in the US for a potential bitcoin ETF.
“We are still sorting through the regulatory regime and requirements in Europe and want to make sure we are on the right side of regulation,” Wood said.
Forbes added: “Watch this space and you may see something from us in the future.”