Ark Invest, led by Cathie Wood, has filed to list four new exchange-traded funds (ETFs) aimed at cushioning potential losses of its flagship fund, the Ark Innovation ETF (ARKK, Financial). These ETFs mark Ark's entry into the buffered ETF market, a strategy that uses options to limit losses while capping gains. This approach is popular among investors seeking protection in volatile markets and has been adopted by companies like BlackRock and Allianz.
According to a recent filing with the U.S. Securities and Exchange Commission (SEC), the proposed funds—ARK Q1 Defined Innovation ETF, ARK Q2 Defined Innovation ETF, ARK Q3 Defined Innovation ETF, and ARK Q4 Defined Innovation ETF—will operate on a rolling 12-month basis starting in January, April, July, and October, respectively. Each fund aims to limit ARKK's price drop to within 50% and will only pass on gains if the fund's increase exceeds approximately 5%.
Ark's major holdings include electric vehicle maker Tesla, cryptocurrency exchange Coinbase, and trading platform Robinhood. Since the beginning of the year, ARKK has risen about 24%, outperforming the S&P 500's approximately 6% gain during the same period.
