A record half-billion dollar redemption from Ark Invest’s flagship fund in a single day has led analysts to highlight the risks arising from the ETF’s heavy exposure to illiquid stocks if outflows pick up pace.
Investors yanked $465 million from Ark Innovation on Monday, according to Refinitiv data. More such redemptions would prompt Wood’s fund to sell liquid holdings to manage the squeeze in the near-term before looking to unwind its illiquid holdings.
Ark Invest meanwhile shuffled its portfolio on Tuesday by cutting its already-tiny holdings in Apple, Amazon, Taiwan Semiconductor and Google-owner Alphabet to beef-up its Tesla stake on Wednesday.
This is one of the problem that ark funds is trying to mitigate. Many people are very bullish and saying they are 50 to 70% into the ark funds, but they don’t even know what stocks are inside these funds. People please realize that ark funds are high risk high return funds, so you should only invest a reasonable % of your portfolio into these funds.