For the first time, individual investors in Europe would be able to gamble on — or against — renowned US investment manager Cathie Wood, as products based on three of her most well-known funds are set to debut on Euronext and the London Stock Exchange.
Leverage Shares, a London-based firm that bundles exchange-traded products tracking numerous overseas companies for a European clientele, will begin offering products based on the high-profile Ark funds on Tuesday. The products will follow the funds one-to-one, or customers will be able to leverage Wood’s earnings or losses in US dollars, euros, or sterling.
Professionals could already wager against Ark using securities, but this will be the second time in less than a month that stockholders can bet against Ark using an ETP. And it will come at a time when many of Ark’s funds are under unparalleled stress, with several of their holdings sliding into market downturns. According to Oktay Kavrak, product strategist at Leverage Shares, the utilized and invertible versions of the funds will “enable stakeholders to invest directional trades and convey their beliefs, if they are appreciative of a stock or ETF, or if they presume it is over-hyped.”
Requests for comment on the introduction of the products that will be listed under tickers with identical names to Ark Invest’s own were not returned. Ark has risen to popularity in the United States due to huge wagers on hot tech stocks. However, the company’s plan has stalled as the prospect of higher US interest rates reduces the allure of some of these frequently unsuccessful businesses.
Specific traders have questioned Wood’s strategy, prompting the development of these new products and Tuttle Capital Management’s SARK (Short Innovation ETF). The flagship ARKK ETF’s short positions have risen to 17% of its shares. According to Goldman Sachs research released at the end of November, five of Ark Invest’s six active ETFs were among the top 10 worldwide theme ETFs for outflows since the market high in mid-February. With $2.1 billion in outflows since February, the genomics-focused ARKG was the worst impacted, followed by the Next Generation Internet fund with $2 billion.
According to Peter Sleep, Senior Portfolio Manager at 7 Investment Management, “there were some large outflows from the Ark ETFs.” However, because of the lengthy process of having items approved by authorities, he warned that investors’ enthusiasm for them may fade when they are launched.