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Ark Invest Eliminates Some Limits on Its ETFs' Holdings

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What You Need to Know

  • The changes were made in an updated supplement to Ark Invest's ETF Trust prospectus.
  • Ark Invest removed limits on investing in more than 30% of a company’s securities and more than 20% of its shares.
  • It also launched its Space Exploration ETF this week, which attracted more than $200 million in assets its first day.

Cathie Wood’s Ark Investment Management has not just debuted a new space ETF; it has eliminated investment caps and added warnings about the investment risks of special purpose acquisition companies in an updated prospectus supplement for its ETFs.

The ARK Space Exploration ETF (ARKX) collected nearly $200 million in assets on Tuesday, its first trading day, but lost slightly more than 1% by the close. By midday trading on Wednesday, the ETF was trading just slightly above its $20.50 debut price.

Just days earlier, as first tweeted by Morningstar’s Chief Ratings Officer Jeffrey Ptak, Ark Invest filed a supplement to the prospectuses for its ETF Trust with the SEC that removed the limits on investing in more than 30% of a company’s securities and more than 20% of a company’s outstanding shares.

The updated supplement also eliminated limits on funds’ holdings of ADRs, warrants and preferreds, and added a new warning that “an investment in a SPAC may lose value” because it has no ongoing business while it seeks acquisitions; its value depends on targeting and completing an acquisition. In the meantime, according to the warning, a SPAC will invest in government securities, money market securities and cash and not pay dividends on any common stock.

The supplement applies to all of the ETFs in its Ark ETF Trust but will presumably have the biggest impact on its active ETFs. The active ETFs are the ARK Innovation ETF (ARKK), ARK Genomic Revolution ETF (ARKG), ARK Autonomous Technology & Robotics ETF (ARKQ), ARK Next Generation Internet ETF (ARKW), ARK Fintech Innovation ETF (ARKF) and ARK Space Exploration ETF (ARKX).

The firm also has two index ETFs: the 3D Printing ETF (PRNT) and ARK Israel Innovative Technology ETF (IZRL).

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