Cathie Wood’s ARK Innovation ETF (NYSE Arca:ARKK) has attracted many investors for its focus on long-term growth and disruptive holdings. But it has been struggling of late as investors have been moving away from growth and more towards safer, value-oriented stocks. Year to date, the fund’s returns are flat.
Soon, Cathie Woods will have a new exchange-traded fund (ETF) for investors to choose from.
Called the ARK Transparency ETF, it won’t include sectors such as alcohol, banking, gambling, tobacco, or oil and gas. It will focus primarily on tech and consumer stocks, including big names like Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL). Tesla (NASDAQ:TSLA), which is a favorite of Wood’s, will also be in the fund. While it still focuses on growth, at the surface, it looks like it will not be as risky as some of ARK’s other funds, including one that is focused on the very long term – the Space Exploration & Innovation ETF (BATS: ARKX)
The new fund will focus on companies that are among the most transparent. It will factor in a company’s legal issues and overall reputation. According to the filing, the fund will be rebalanced every quarter and no single holding will make up more than 5% of the portfolio. There will be 100 stocks in the fund and their market caps will have to be $1 billion or greater.
For risk-averse investors, this can be a great way to tap into some relatively safe growth opportunities. However, that doesn’t mean the fund will be full of cheap stocks as typically ARK’s ETFs hold some high-priced investments that while they might turn out to be good long-term buys, they could be vulnerable in a market correction.