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ARKK, ARKG, ARKF and ARKW

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OrthoSurg

Active Member
Jun 2, 2017
2,799
22,233
Montreal
All these ETFs were between +50% and +75% last year in my portfolio. Now they all are in the red ranging from -5% to -20%. Meanwhile, my TSLA has skyrocketed like never before. I wanna have the insight of some investors here who have counter arguments to my plan on selling them gradually to buy TSLA stock from selling agressive Put contracts near ITM. It is now my usual mantra to buy high sell low but they have the advantage to post a loss in my portfolio to offset the profits from option selling.

What are you thoughts on ARK funds to the investors still holding them with diamond hands?
 
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I only have ARKG, remaining ARK funds contain stocks from Pseudo Republic of China (aka East Taiwan province).

I have made enough money not to compromise my values for marginal performance improvements. If there is a bit of happiness that money can buy is to be able to say FU to ethical compromises. For the same reasons I stay clear from Garry Black's Future Fund.

I like ARKG on principle because it is a sector that is very uncorrelated to TSLA core business. I used to cherry pick stocks from ARKG and invest individually, with the downturn I triggered the loss those tickers that were at net loss and rolled that amount into ARKG.

Even though ARKG is my favourite ARK fund there is a strong and valid critique that they do not do enough analysis. Their research team is quite small and sometimes under qualified. There is a video on YT that argues very well on how ARKG continued investment in Berkeley Lights and Arcturus is indicative of insufficient research.

I have an "advisor" within my family with MolGen degree and we did very well by cherry picking stocks from ARKG - essentially you apply filter to already pre-filtered candidates, we also picked up PACB before ARK did. I've stopped doing that because our overall biotech exposure is to small amount to justify the effort. Depending on your time and knowledge it maybe worth doing though.
 
Remember, ARKK funds objective is not to grow the fastest possible. It is to grow their assets under management as much as possible, so they maximize their their management fees. Of course they do excellent research, which is what attracts investors to them.
 
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I only have ARKG, remaining ARK funds contain stocks from Pseudo Republic of China (aka East Taiwan province).

I have made enough money not to compromise my values for marginal performance improvements. If there is a bit of happiness that money can buy is to be able to say FU to ethical compromises. For the same reasons I stay clear from Garry Black's Future Fund.

I like ARKG on principle because it is a sector that is very uncorrelated to TSLA core business. I used to cherry pick stocks from ARKG and invest individually, with the downturn I triggered the loss those tickers that were at net loss and rolled that amount into ARKG.

Even though ARKG is my favourite ARK fund there is a strong and valid critique that they do not do enough analysis. Their research team is quite small and sometimes under qualified. There is a video on YT that argues very well on how ARKG continued investment in Berkeley Lights and Arcturus is indicative of insufficient research.

I have an "advisor" within my family with MolGen degree and we did very well by cherry picking stocks from ARKG - essentially you apply filter to already pre-filtered candidates, we also picked up PACB before ARK did. I've stopped doing that because our overall biotech exposure is to small amount to justify the effort. Depending on your time and knowledge it maybe worth doing though.
Love the life jackets prose.
 
Holy *sugar*. You guys get the ARK emails?

They sold a ton in several of their funds and didn’t buy a single thing.

To be fair, they did say in the email, for yesterday's transactions:

"NOTICE: All transaction activity today was for purposes of raising cash for the 2021 annual ETF distribution. This cash raise activity has been completed. "
 
Holy *sugar*. You guys get the ARK emails?

They sold a ton in several of their funds and didn’t buy a single thing.


This is good website tracking ARK activity:

Two important concepts:
- selling and buying are strongly influenced by daily flows to and out of the ETF
- weight in fund is measured in daily prices and influenced by relative price changes of fund components
 
Two important concepts:
- selling and buying are strongly influenced by daily flows to and out of the ETF
Is that true? I thought that Cathy/ARK didn't have to deal with the daily flows at all, that is handled by the ETF mechanisms themselves. Inflow cash doesn't go to ARK, it goes to the "market makers" that buy blocks of stocks that match the ETF make-up and deliver those shares to ARK. ARK just buys/sells as they see fit with the shares they hold. The same for outflows, the "market makers" take shares from ARK and sell a block(s) to retire the block. (I'm probably overly simplifying the process, but that is my understanding of the general process for how all ETFs work.)

Here is a document that goes over how it works: https://www.vanguard.com.hk/documents/etf-how-etfs-work-en.pdf
 
Is that true? I thought that Cathy/ARK didn't have to deal with the daily flows at all, that is handled by the ETF mechanisms themselves. Inflow cash doesn't go to ARK, it goes to the "market makers" that buy blocks of stocks that match the ETF make-up and deliver those shares to ARK. ARK just buys/sells as they see fit with the shares they hold. The same for outflows, the "market makers" take shares from ARK and sell a block(s) to retire the block. (I'm probably overly simplifying the process, but that is my understanding of the general process for how all ETFs work.)

Here is a document that goes over how it works: https://www.vanguard.com.hk/documents/etf-how-etfs-work-en.pdf

I agree with the way ETFs are fulfilled by market makers, but the question is what counts in the reported sales.

At the end of the day net share count changes through both mechanisms: active sales and ETF flows, we see only one number being reported ... I assumed what we see is the sum of both. With only 1 number being reported, if it was only active sales, then without knowing the change to size of the fund (passive sales) the number would not inaccurately describe changes in relative weights.

Anyway you might be right and I would really like to know for sure.
 
At the end of the day net share count changes through both mechanisms: active sales and ETF flows, we see only one number being reported ... I assumed what we see is the sum of both. With only 1 number being reported, if it was only active sales, then without knowing the change to size of the fund (passive sales) the number would not inaccurately describe changes in relative weights.

Anyway you might be right and I would really like to know for sure.
My understanding is that the PDs, Participating Dealers, create large blocks of ETF shares, with all the base stocks going to ARK. Then they sell the ETF shares individually on the open market when there is demand. When they deplete that block they create a another block and repeat the process. Those blocks are always created to match what the current ARK make-up is.

I don't think ARK knows how many ETF shares are actually "on the market", i.e. the PDs have created ETF shares that they are just holding until demand calls for them to be issued. (When you buy an ETF share you don't know if you are buying an existing one or a newly minted one.)

i.e. I think the buys/sales we see ARK report are just the transaction they make, and has nothing to do with the PDs adding/removing ETF shares. (Because the PDs buy the shares and just add them to the ARK holdings ARK doesn't buy those.)

I seem to recall Cathie Woods saying at one point that she was glad ARK doesn't have to deal with the inflows/outflows. But I can't find that quote right now.
 
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This is the difference between a mutual fund and a ETF. Cathie and ARK doesn't get squat when you buy their products. The shares you are buying are secondary market transactions from someone else. Could be an institution or another individual. Just like when you buy Tesla shares Musk and Tesla the company don't get a penny. Thats why Cathie doesn't have to deal with inflows or outflows. ARK (and Tesla for that matter) doesn't get any $ to invest unless they are doing a primary offering. ARK and Tesla shares are brokered by market makers that maintain an inventory of ARK shares. That's kind of why they sign up to be a DMM (Designated Market Maker). But you don't have to be a DMM to play in the ARK market.

It's exactly like cars. You don't have to be a Ford dealer to buy and sell ford cars. Car dealers are selective on what they take in trade. Or rather what they keep in their inventory. Typically when a high end car dealer takes a car that is not at their product e.g. a BMW dealer takes a Subaru in trade, they whole sale it to someone else. Or they just tell you they won't take it in trade.

When you buy a mutual fund share the $ goes directly to the company and they have to do something with it. You get mutual fund shares directly from the company. It's a continuous IPO that never ends. And you can't buy mutual funds from someone else. But I can buy your ARK shares from you.
 
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@Cal1 - that I did not know, but makes sense. And all this time I thought my ARKG ETF was supporting her as well. And @Paracelsus's post about supporting Ms Wood based on her positive impact on the market sounded so good!! It appears there is a mutual fund one can buy. Would that actually support ARK Invest's business?
FWIW, I use Schwab (when USAA got out of the investment business) and they list "American Beacon ARK Disruptive Innovation" (3 classes), but I'm guessing that's not quite the same thing.

I've decided to accelerate my retirement plans and am trying to figure out how to diversify without "diworsifying" (IIRC, credit for that term goes to Artful Dodger). I'd like to balance CSR, ESG and avoiding imminently obsolete industries.... I was hoping more ARKx investments would do that, but am not surprised there's no easy answer.
 
@Cal1 - that I did not know, but makes sense. And all this time I thought my ARKG ETF was supporting her as well. And @Paracelsus's post about supporting Ms Wood based on her positive impact on the market sounded so good!! It appears there is a mutual fund one can buy. Would that actually support ARK Invest's business?
FWIW, I use Schwab (when USAA got out of the investment business) and they list "American Beacon ARK Disruptive Innovation" (3 classes), but I'm guessing that's not quite the same thing.
Holding does help ARK, it removes shares from circulation, and if there is other demand that may help run the participating dealers out of inventory forcing them to buy/create another block of the ETF shares. (When they do that the shares go to ARK increasing their AUM.)

There is decent short interest in some of the ARK ETFs. For example I am currently making ~3.5% by loaning out some ARKG and ARKK shares.
 
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