Although Wood’s ETFs are mainly focused on listed equities, liquidity concerns have dogged ARK because the company often invests in niche corners of the market.
When the firm exploded in popularity after its stellar run in 2020, the amount of cash funneling into those stocks ballooned. At one point, ARKK held stakes of 10% or more in about 30 names, including more than 25% in Compugen Ltd., Organovo Holdings Inc. and Intellia Therapeutics Inc.
The shift to make it harder to pull cash out also mimics a trend in the hedge fund industry, where firms are asking clients to lock up cash for longer. Late last year, Izzy Englander’s Millennium Management was raising cash for a new share class that extended the redemption period to five years. Brevan Howard Asset Management has asked some investors to commit to two.
Meanwhile, Wood has previously noted that innovative companies are valued more highly in the private markets than the public sphere. Tweeting a news story in January about a company choosing to raise funds privately, she said the disconnect “is as wide as I ever have seen.”
Private markets are typically considered more risky than public, thanks to lower disclosure and regulatory requirements, though potential gains can be larger. The Venture Fund will carry a minimum investment of $1,000, according to the filing, providing a low bar for retail investor participation. The product can also leverage to help boost returns.
The $11.5 billion ARKK dropped 27% this year through Thursday. The latest data show net outflows of about $265 million in 2022.
This article was provided by Bloomberg News.