Ark Investment Management, owned by Cathie Wood, is closing down one of its ETFs. This is the first time since the firm’s inception that Ark has pulled the plug on their exchange-traded fund.
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As per Bloomberg News, ARK, in its regulatory filing, informed the closure of its CTRU -ARK Transparency ETF. Last year, the St. Petersburg-based company launched this fund with holdings like Spotify Technology SA and Teladoc Health Inc. The fund aimed to invest in companies that were high on transparency scores.
Ark informed that Transparency Global, which shaped the fund’s portfolio, will stop the index calculation by July. The firm investigated other index providers to provide a proper solution. When they could not find one, they decided to close the fund according to the release by the firm.
The CTRU ETF gained about $12 million in assets since the fund’s inception. This was just a fraction of the $9 billion flagship fund of Ark. This particular fund was one of the rare portfolios that were passive, unlike Woods’s other funds. Wood had personally handpicked stocks that she saw as influencing the future of healthcare, finance, and other industries.
According to Nate Geraci, president of investment advisory firm ETF Store, the fund looked an odd fit right from its beginning. The Transparency ETF from Ark was at odds in approach because of its passive positioning. ARK is known for its disruptive innovation and is always focused on active management.
The Transparency fund value has declined by more than 30% since its December 2021 debut. The filing showed that the fund would not take fresh creation orders after July 21. The redemption orders are valid only up to July 26.
This year has been challenging for investors who took exposure to growth funds. Wood’s ARKK plunged more than 50% with Federal Reserve raising interest rates, and recession fears loom. ARK has lost almost 50 percent of its AUM value since December.
