FAQs | MOST FREQUENTLY ASKED QUESTIONS

If you have additional questions contact us at faq@ark-invest.com

Questions related to ARK Innovation ETFs:

How do I use ARK ETFs in my portfolio?

ARK believes that investors can use ARK ETFs as a tool to diversify their investment portfolios, as part of a long-term growth strategy, or as a hedge against rapid change. 

For more information please click here to visit our How To Invest? page.

What is the fee structure of ARK ETFs?

For information on the annual expense ratio of the ARK Index ETFs, please visit our ETF pages: PRNT, IZRL.

The annual expense ratio of each Active ARK ETF is 0.75%, or $75 per year for every $10,000 invested. These ARK ETFs are fully actively managed (similar to mutual funds).

The ARK ETFs do not charge sales loads or 12b-1 fees.

Why do ARK Active ETFs invest in all market capitalizations?

Each of ARK’s active ETFs invests in a wide range of companies, from mega caps to micro caps, that ARK believes are going to contribute to and benefit from the rapidly changing market landscape. Small cap companies may offer a higher growth opportunity, whereas large cap companies may offer less volatility.

What does “cross-sector” mean?

Unlike traditional investment strategies that specialize in certain narrowly focused sectors of the economy, the ARK active ETFs are theme-based and not constrained by economic sector. Instead, the ARK active ETFs have cross sector portfolios in order to uncover disruptive innovation that impacts multiple industries.

Where can I buy ARK ETFs?

ARK Active ETFs trade on the New York Stock Exchange while ARK Index ETFs are expected to trade on the BATS Exchange once they commence operations. Investors can purchase the ARK ETFs through broker-dealers. Brokers will need a security identifier such as the ticker symbol, CUSIP, or ISIN, located on the webpage for each ARK ETF. The ARK ETFs can be traded at any time during the normal U.S. trading hours.

For more information and a list of broker-dealers please click here to visit our How To Invest? page.

Note: The “Trade Now” button on ARK’s websites offers investors are user-friendly way to connect to their online brokerage account. For maximum security, brokerage information is always fully encrypted and never stored by ARK or any third parties.

Can I buy them directly from ARK?

No, investors cannot purchase ARK ETFs directly from ARK.

  • Investors can purchase the ARK ETFs through a broker-dealer.
  • The “Trade Now” button on ARK’s websites offers investors are user-friendly way to connect to their online brokerage account. For maximum security, brokerage information is always fully encrypted and never stored by ARK or any third parties.

For more information and a list of broker-dealers please click here to visit our How To Invest? page.

What differentiates ARK?

We seek to help investors recognize the true market potential of disruptive innovation and capture investment opportunities appropriately. ARK ETFs are freed from traditional constraints (sectors, market caps, or geographic boundaries) and are created based on full-picture, top-down research, and classic bottom-up financial analysis. The result, a low correlation to traditional growth and value strategies, offering attractive long-term performance and capital appreciation.

Questions related to Exchange Traded Funds (ETFs):

What are ETFs?

ETF stands for Exchange Traded Fund.

ETFs are listed on various exchanges like the New York Stock Exchange (NYSE), BATS Exchange, or NASDAQ. An ETF is a portfolio of securities, much like a mutual fund. ETFs can be based off an existing index, or can be a unique mixture of holdings determined by the fund manager. When traded, ETFs act like a stock: An investor can trade an ETF during market hours like trading a share of an equity. Simply call up a broker or log onto an online brokerage and put in an order.

For more information click here.

How liquid are ETFs?

ETFs possess two different types of liquidity, making them easily tradable. First, ETF shares are bought and sold like a stock on an exchange, making it easy for investors to trade the ETF. Second, ETFs possess an underlying liquidity due to their unique creation and redemption process, so low trading volume should not impact an investor’s ability to trade the ETF during market hours.

For more information, please read the following article: Understanding ETF Liquidity

What are the tax implications when investing in ETFs?

Index (or Passive) ETFs may offer tax advantages relative to mutual funds due to their structure and unique creation and redemption process. The creation and redemption processes used by index ETFs are designed to mitigate adverse effects on an ETF’s portfolio that could arise from frequent cash purchase and redemption transactions that affect the net asset value of the ETF.

In contrast to conventional mutual funds, where frequent redemptions can have an adverse tax impact on taxable shareholders because of the need to sell portfolio securities which, in turn, may generate taxable gain, the in-kind redemption mechanism of an index ETF, to the extent used, generally is not expected to lead to a tax event for shareholders. The actively managed ARK ETFs (ARKQ, ARKG, ARKW, and ARKK) are not permitted to reconstitute their portfolios through the use of custom baskets (and in-kind transfers).

As a result, the actively managed ARK ETFs are subject to trading-related short-term and long-term capital gains and losses. In addition, the actively managed ARK ETFs may make distributions annually that generally will be taxed as ordinary income. Other possible tax implications may occur when shares are sold in the secondary market or a creation or redemption unit is created. Tax consequences will vary by individual.

What are the differences between Active and Index ETFs?

Index (or Passive) ETFs are tethered to an underlying index, like the S&P 500 or Dow Jones Industrial Average. Fund management is focused on matching the underlying index, instead of making decisions based on research. A passive ETF follows its underlying index as its benchmark.

ARK developed its indices based on thematic research that highlighted niche areas of innovation.

Active ETF management is based on research and the portfolio manager’s discretion with the investment policies of the ETF, as with an active mutual fund. Most ETFs in the active space are based on pre-existing strategies, just in a different wrapper. Because the manager is picking stocks based on research, actively managed funds are not tethered to an index.

How do ETFs differ from Mutual Funds?

An ETF is similar to a mutual fund in that it offers investors a proportionate share in a pool of stocks, bonds, and other assets. Also, like a mutual fund, an ETF is required to post the marked-to-market net asset value (NAV) of its portfolio at the end of each trading day. One major difference is that investors buy and sell ETF shares on a stock exchange through broker-dealers, much as they would trade individual stocks. In contrast, mutual fund shares are not listed on stock exchanges. Retail investors buy and sell mutual fund shares through a variety of distribution channels, including directly from a fund company or through a financial adviser or broker-dealer.

Mutual funds and ETFs are also priced differently. Mutual funds are “forward priced.” Investors can place orders to buy or sell shares throughout the day, but all orders received during the day will receive the same price—the fund’s NAV at the next time it is computed. Most mutual funds calculate their NAV as of 4:00 p.m. Eastern time because that is the time U.S. stock exchanges typically close. In contrast, the market price of an ETF share is continuously determined through trading on a stock exchange. Consequently, the price at which investors buy and sell ETF shares may not necessarily equal the NAV of the portfolio of securities in the ETF. In addition, two investors selling the same ETF shares at different times on the same day may receive different prices for their shares, both of which may differ from the ETF’s NAV. (Source: Investment Company Institute.)

What are the benefits of ETFs?

Liquidity
ETFs trade on an exchange like a stock, thus they have similar liquidity and investors can trade them throughout market hours.

Transparency
ETFs disclose their holdings daily. Passive ETF holdings should reflect the index to which they are tethered. Active ETFs are similarly transparent and required by the SEC to disclose the holdings everyday. Mutual funds are not required to disclose their holdings daily, and stocks are naturally transparent as a single security.

Diversification
ETFs are packaged and sold as a unique collection of securities. Holding one ETF could offer an investor exposure to hundreds of securities, instead of just buying and selling individual stocks and bonds.

Tax Efficiency
The ETF creation and redemption process, which uses in-kind transfers of securities, makes index ETFs relatively more tax efficient when compared to mutual funds and stocks. Mutual funds are taxed when a manager sells securities within the fund and a capital gain is distributed. A tax must be paid on a stock every time it is sold.

Low Cost
ETF expense ratios generally are lower than mutual funds. According to Morningstar Research, the average ETF expense ratio in 2014 was 0.44%, which compares to 1.25% the average mutual fund charges. Compared to buying single stocks, mutual fund and ETF investors bear their pro rata share of the fund’s brokerage cost but do not pay the full brokerage fees for several individual stocks to gain broader exposure to a segment of the market.

Learn More

Other Questions:

What are the benefits of transparency?

ARK seeks to invest in innovation that will make the world a better place by allocating capital to its best and most advantageous use.  We also believe that the financial industry will benefit from more transparency. In a recovering market, regaining the trust of the investor and consumer is crucial. We want investors to see what they have invested in every day and comprehend the risk in order to understand the value of their investment, so they can watch as our portfolios match the pace of innovation.

What is Disruptive Innovation?

Disruptive innovation is the introduction of a technologically enabled new product or service that permanently changes an industry by creating simplicity and accessibility while driving down costs.

For more information click here to visit our What is Disruptive Innovation page.

What is Thematic Investing?

Thematic investing captures long-term trends that cut across sectors and geographic boundaries. It recognizes that the world is changing rapidly and incorporates a deep understanding of the underlying disruptive innovations that drive long-term value creation and risk.

In the actively managed ARK ETFs, ARK is focused on investing in promising areas of disruptive innovation and nonlinear change. The starting point for our research is from the top down. Our current research themes are the Genomic Revolution, Industrial Innovation, and Web x.0, covering such elements as genetic breakthroughs, the third industrial revolution, and web-based transformation. We believe that all of these themes and their elements are combining to disrupt most industries in the United States and around the world. These broad themes include companies across sectors and market capitalizations.

For more information please click here to visit our Investor Education Section.

Why Is the theme called Genomic Revolution?

Genetics and genomic sequencing are the catalysts for innovation across multiple sectors including health care, agriculture, and technology. Greater knowledge in these areas will build a platform for innovation beyond what we currently understand. The falling price of genomic sequencing has enabled scientists to work at a pace previously unachieved to decipher the language of life. Combined with new capabilities in big data storage, we can better understand our past and future and apply that understanding to the present.

Why is the theme called Web x.0?

The Internet permeates our lives and affects every facet of industry. Initially, the web was static HTML (known retroactively as “Web 1.0”) and lacked connectivity. After the dot-com bubble popped, the Internet evolved into a social creature, “Web 2.0” of the late 2000s. The most recent iteration is “Web x.0.” We believe the open-ended web will transform the lives of individuals and businesses in more profound ways, most of which we cannot even imagine now.

Why is the theme called Industrial Innovation?

Innovation is in the process of transforming the industrial sector as dramatically as genomics and the web are changing other sectors. Advances in technology have enabled breakthroughs in energy storage, electric and autonomous cars, 3D printing, nanomaterials, robotics, and space exploration. These elements are affecting the core processes and products of manufacturing.

Investors should carefully consider the investment objectives and risks as well as charges and expenses of an ARK ETF before investing. This and other information are contained in the ARK ETFs' prospectuses, which may be obtained by clicking here. The prospectus should be read carefully before investing. An investment in an ARK ETF is subject to risks and you can lose money on your investment in an ARK ETF. There can be no assurance that the ARK ETFs will achieve their investment objectives. The ARK ETFs’ portfolios are more volatile than broad market averages. The ARK ETFs also have specific risks, which are described in the ARK ETFs' prospectuses.

Shares of the ARK ETFs may be bought or sold throughout the day at their market price on the exchange on which they are listed. The market price of an ARK ETF's shares may be at, above or below the ARK ETF’s net asset value ("NAV") and will fluctuate with changes in the NAV as well as supply and demand in the market for the shares. The market price of ARK ETF shares may differ significantly from their NAV during periods of market volatility. Shares of the ARK ETFs may only be redeemed directly with the ARK ETFs at NAV by Authorized Participants, in very large creation units. There can be no guarantee that an active trading market for ARK ETF shares will develop or be maintained, or that their listing will continue or remain unchanged. Buying or selling ARK ETF shares on an exchange may require the payment of brokerage commissions and frequent trading may incur brokerage costs that detract significantly from investment returns. Not FDIC Insured – No Bank Guarantee – May Lose Value

All statements made regarding companies, securities or other financial information on this site are strictly beliefs and points of view held by ARK Investment Management LLC and/or ARK ETF Trust and are subject to change without notice. Certain information on this site was obtained from sources that ARK believes to be reliable; however, ARK does not guarantee the accuracy or completeness of any information obtained from any third party. The information on this site is for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. The information on this site is general in nature and should not be considered legal or tax advice. An investor should consult a financial professional, an attorney, or tax professional regarding the investor’s specific situation.

Certain hyperlinks or referenced websites on this site may, for your convenience, forward you to third parties' websites, which generally are recognized by their top level domain name. Any descriptions of, references to, or links to other products, publications or services do not constitute an endorsement, authorization, sponsorship or affiliation with ARK with respect to any linked site or its sponsor, unless expressly stated by ARK. Any such information, products or sites have not necessarily been reviewed by ARK and are provided or maintained by third parties over whom ARK exercises no control. ARK expressly disclaims any responsibility for the content, the accuracy of the information, and/or the quality of products or services provided by or advertised on these third-party sites. ARK reserves the right to terminate any hyperlink or hyperlinking program at any time.

ARK Investment Management LLC is the investment adviser to the ARK ETFs.

Foreside Fund Services, LLC, distributor.

© 2018. ARK ETF Trust. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission.

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