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Portfolio > ETFs

New ETF Bets Against Cathie Wood's Flagship ARKK ETF: Portfolio Products

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What You Need to Know

  • The Ark Innovation ETF has fallen about 6% this year after rising 150% in 2020.
  • Also, Impact Shares, iShares and VanEck intorduced ESG ETFs.
  • Hartford Funds launched its first semi-transparent ETF.

It’s not surprising that several ETFs focused on the transition to a low-carbon global economy were introduced while the Glasgow climate change summit was in session, but an ETF that bets against another ETF, which was once the darling of the market, is. That’s what happened during the early weeks of November.

Betting Against Cathie Wood’s ARKK ETF

Tuttle Capital Management launched the Short Innovation ETF (SARK) on on the Nasdaq. The ETF seeks the inverse return of the ARK Innovation ETF (ARK) for a single day, not for any other period.

According to Tuttle Capital, the ETF lets investors potentially profit from price declines in a portfolio of companies involved in disruptive industries such as electric vehicles, cryptocurrencies, next-gen internet and genomics and telemedicine — the types of companies that Ark invests in and that its CEO, Cathie Wood, champions. Year-to-date, ARKK, which gained over 150% in 2020, has lost about 6%. SARK is betting that those losses will grow.

During its first three trading sessions, SARK gained 5.5%. ARKK lost 5.3% during the same period. It didn’t help ARKK that this was the week Tesla, a top holding, fell because CEO Elon Musk sold millions of shares worth about $5 billion. Both ETFs have a 0.75% expense ratio.

Todd Rosenbluth, head of ETF & mutual fund research at CFRA, tweeted, “$SARK provides a more accessible way to bet against $ARKK than shorting the #ETF directly.”

Short interest in ARKK was at record 17% last Wednesday, according to the Financial Times, citing data provider S3 Partners.

Matthew Tuttle, chief executive officer and chief investment officer of Tuttle Capital Management, the advisor to SARK, said in a statement that the fund is for investors who “believe that the current bull thesis for transformational industries is stretched,” or want protection their existing portfolio of high-growth stocks.

Climate Change and ESG ETFs

Among the new ETFs focused on combating climate change are the Impact Shares MSCI Global Climate Select ETF (NTZO), developed in partnership with the the United Nations Capital Development Fund (UNCDF) and the Global Investors for Sustainable Development (GISD) Alliance; the VanEck Green Metals ETF (GMET) and sustainable versions of iShares Investment Grade Corporate Bond and Minimum volatility equity ETFs.

Impact Shares MSCI Global Climate Select ETF (NTZO)

NTZO aims to maximize exposure to companies that can potentially benefit from opportunities arising from the transition to a lower-carbon economy and increase exposure to companies that are setting science-based emission reduction targets or commit to reduction targets and have a track record of decarbonizing at a rate of 7%.

The ETF tracks the MSCI ACWI Climate Pathway Select Index, which excludes certain securities based on certain ESG and climate change-related criteria and has an expense ratio of 0.30%. It will donate its net management fee to UNCDF to build climate resilience and adaptation in the least developed countries.

New iShares Advanced ESG ETFs

The iShares ESG Advanced Investment Grade Corporate Bond ETF (ELQD) invests in investment-grade corporate bonds from issuers with favorable environmental, social and governance (ESG) ratings. It applies extensive climate-based screens to exclude issuers involved in fossil fuels and controversial activities, including civilian firearms and controversial weapons, tobacco and alcohol, based on the iBoxx MSCI ESG Advanced USD Liquid Investment Grade Index.

The iShares ESG MSCI USA Min Vol Factor ETF (ESMV), based on the MSCI USA Minimum Volatility Extended ESG Reduced Carbon Target Index, favors U.S. large- and mid-cap stocks that have lower volatility characteristics, reduced carbon exposure and improved environmental, social and governance quality characteristics relative to the parent index.

Both iShares ESG ETFs have net expense ratios of 0.18%.

VanEck Green Metals ETF

The VanEck Green Metals ETF (GMET) provides comprehensive global exposure to the producers, refiners, processors and recyclers of the metals that are essential to the world’s ongoing transition to a low carbon economy.

The ETF tracks the MVIS (MV Index Solutions) Global Clean-Tech Metals Index, a rules-based index offering exposure to companies involved in the production, refining, processing and recycling of these metals.

“New technologies, from electric vehicles to offshore wind farms, cannot function without green metals such as lithium, copper, zinc and manganese,” said Brandon Rakszawski, senior ETF product manager, in a statement. “As governments around the world mandate and consumers embrace these shifts to lower carbon approaches, demand for these metals is only expected to increase.”

GMET has a net expense ratio of 0.59%.

Hartford Funds’ First Semi-Transparent ETF

Hartford Funds launched its first semi-transparent ETF, the Hartford Large Cap Growth ETF (HFGO), an actively managed ETF that seeks capital appreciation through a bottom-up stock selection process.

HFGO invests is a diversified portfolio of common stocks covering a broad range of industries and companies that Wellington, its sub-advisor, believes exhibit long-term growth potential. The fund defines large-cap securities broadly, with market caps within the collective range of the Russell 1000 Index and S&P 500 Index, which was between $529.7 million and $2.34 trillion as of Sept. 30.

HFGO uses Fidelity Investments’ “tracking basket” methodology, which limits the public disclosure of its actual portfolio on a daily basis but provides enough information to market makers and authorized participants to promote efficient trading of shares. The ETF has an expense ratio of 0.59%.

Pictured: Ark Invest CEO Cathie Wood. (Photo: Bloomberg)


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