Iowa to Innovation
Tinsman said the new fund originated with his family’s fertilizer business in Iowa. The family wanted to diversify and it looked at investing in ARKK, but wanted a portfolio with more reasonable valuations, so Tinsman created the new ETF.
The fund’s likely biggest holdings will include some more established tech companies that ARKK doesn’t invest in, such as Microsoft Corp. and Alphabet Inc., according to Tinsman. The new ETF will have the same expense ratio as ARKK at 75 basis points.
A key challenge in competing with Wood is the loyal following she has, said Murphy of ETF Think Thank. Even though ARKK has tumbled this year, investors have poured $1.5 billion into the fund.
“ARKK is a success because of Cathie Wood; everyone knows her name,” she said. For the new ETF, “putting a face to the fund I think would be really important if they really want to find that strong following and compete with someone like Cathie.”
--With assistance from Anthony Rayar.
This article was provided by Bloomberg News.