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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.

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Understanding ETFs

We believe Exchange Traded Funds (ETFs) can provide an efficient and simple way to invest in different segments of our economy. For example, most of ARK’s ETFs are designed to give investors access to areas of disruptive innovation and aim to provide long-term growth of capital.

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Exchange

ETFs are listed on various exchanges. For instance, U.S. exchanges include the New York Stock Exchange (NYSE), Chicago Board Options Exchange (Cboe), and Nasdaq.

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Traded

While there are differences, ETFs act similar to stocks when traded. Investors can buy and sell ETF shares during market hours, like trading shares of a public company.

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Fund

An ETF is a portfolio of securities, much like a mutual fund. ETFs can be based on an existing index or a unique mixture of stocks that can change daily.

How Are ETFs Different?

General ETF Comparison Table

ETFs Stocks Mutual Funds
Liquidity    
Diversification    
Low Expenses    
Low Minimum Investments      
Transparency    
Can Use Limit Order    

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. Benefits may vary from fund to fund. Diversification may not protect against market risk. This material is not intended to be tax advice. The tax consequences of dividend distributions may vary by individual taxpayer. Please consult your tax professional or financial adviser for more information concerning your specific situation. Investors should carefully consider the investment objectives, risks, and expenses of any investment solution before investing.

General Fee Structure Table

ETFs Stocks Mutual Funds
12b-1 Fee  
Load In/ Out Fees  
Management Fee    
Transfer Agency Fee  
Brokerage Fee      

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. Fee structure may vary from fund to fund and additional fund or management fees may apply. Investors in individual stocks or bonds do not bear management fees associated with ETFs or mutual funds. Please consult your tax professional or financial adviser for more information concerning your specific situation. Investors should carefully consider the investment objectives, risks, and expenses of any investment solution before investing.

What Are The Benefits Of ETFs?

An Exchange Traded Fund (ETF) allows investors to buy and sell an entire basket of securities with a single transaction and can provide the following benefits:

Liquidity

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

Transparency

Most 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 every day. Mutual funds are not required to disclose their holdings daily. 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 several if not 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, distributing a capital gain or loss to all mutual fund investors.

Low Cost

Based on ARK's research, ETF expense ratios generally are lower than mutual funds. Compared to buying single stocks, mutual fund and ETF investors bear their pro-rata share of the fund’s brokerage cost.

How Does The ETF Creation And Redemption Process Work?

Most of an ETF’s liquidity comes from its underlying securities due to its unique creation and redemption process. Demand for stocks in the underlying portfolio drives the price. The supply of ETF shares is not fixed and can expand or contract daily. Thus, large orders are either filled with outstanding shares or, when necessary, by creating or redeeming ETF shares.

  • The ETF provider publishes a list of holdings (Creation Basket)
  • The Authorized Participant (AP) delivers cash or buys and delivers the basket of securities to the ETF provider.
  • Once the ETF provider receives the cash or basket of securities, the provider exchanges a block of the equally valued ETF shares with the AP, called a creation unit. (Usually formed in blocks of 50,000 shares)
  • The AP sells the ETF shares to investors on the stock exchange at market value.

Active vs. Index ETFs

ETFs can be actively managed or seek to provide investment results that correspond closely to a benchmark index. ARK is known for its active management and the majority of our ETFs are actively managed.

Active ETF

Active ETF management is based on research and the portfolio manager’s discretion within the investment policies of the ETF, similar to an active mutual fund. Because the portfolio manager is picking stocks based on research, actively managed funds are not attempting to match or track the performance of a given index.

Index ETF

Index ETFs—sometimes called Passive ETFs—are tethered to an underlying index (i.e., S&P 500 or Dow Jones Industrial Average). An Index ETF aims to match the performance of a given benchmark index and is therefore "passively managed." Generally, fund managers only change the asset allocation when changes occur in the underlying index (i.e., quarterly rebalancing).

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DISCLOSURE

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.

© 2022. ARK ETF Trust. No part of this material may be reproduced in any form, or referred to in any other publication, without written permission.

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