Exchange-Traded Funds (ETFs) provide an efficient and simple way to invest in different segments of our economy. For example, ARK’s ETFs are designed to give investors an easy way to access innovation areas.

ETFs are listed on various exchanges like NASDAQ, NYSE, or BATS.

ETFs act similar to stocks when traded. An investor can trade an ETF during market hours like trading shares of an equity. Simply call up a broker or log onto an online brokerage and put in an order.

An ETF is a portfolio of securities, much like a mutual fund. ETFs can be based off an existing index, or a unique mixture determined by the fund manager.

ETFs, What are ETFs, What is an ETF, Active ETF, Index ETF, ARK Invest, ARK ETF

Due to a list of benefits as shown below, ETFs are becoming more and more popular. They are an effective tool for different investment strategies and enable individual investors to obtain economies of scale. An ETF allows investors to buy and sell an entire basket of securities with a single transaction throughout the trading day.


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.

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.

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.

ETF Comparison Table*

Low Expenses
Low Minimum Investments
Can Use Limit Order

Fee Structure Table*

12b-1 FeeX
Load In/ Out FeesX
Management FeeXX
Transfer Agency FeeX
Brokerage FeeXXX
*Comparison tables are intended to provide a general overview. Benefits and fee structure may vary from fund to fund. Diversification may not protect against market risk. Management fees associated with fund investments are not borne by investors in individual stocks or bonds. This material is not intended to be tax advice. The tax efficiencies associated with index or passive ETFs do not apply to actively managed ETFs. The tax consequences of dividend distributions may vary by individual taxpayer. Please consult your tax professional or financial adviser for more information with regard to your specific situation.


Active ETFs
Active ETF management is based on research and the portfolio manager’s discretion within 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.

Index (Passive) 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 fundamental or quantitative research. A index ETF follows its underlying index as its benchmark.

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.

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