The Ark ETFs blew up in popularity in 2021 due to their funds seeing spectacular growth. At the same time CEO Cathie Wood gained cult like status among investors and was thought be the latest investing visionary.
A lot of this performance was due to the ballooning valuations of growth stocks due to low-interest rates and record levels of money printing to help boost the economy during the pandemic.
But as the markets start to correct as nation-states pull back stimulus and central banks raise interest rates, Ark funds have taken a pounding. The flagship fund the Ark Innovation ETF is down 53% year-to-date at the time of writing (22/06/2022).
For some this may be a buying opportunity, but can you actually buy the Ark ETFs from Europe?
Here are some of your ARK ETF investment options in Europe:
Firstly, as ARK ETFs are domiciled in the US they do not fully comply with the EU’s legislation when it comes to ETFs.
In 2018, the EU brought in the Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation. As part of this regulation fund managers must provide investors with a Key Information Document (KID) with each investment product, that will give them everything they need to know about the investment such as the risks of loss etc.
Because of these regulations you will not see the ETFs listed directly on any of the European brokerages. But there are alternative ways of getting exposure to the performance of the ARK ETFs.
eToro is a CFD (Contract for Difference) broker. CFDs allow you to speculate on the rising or falling prices of underlying assets, which could be a stock, ETF or any other type of asset, without actually owning underlying asset.
People often think that CFD are highly risky products and that is true in most cases where they use leverage. But when traded without leverage they will behave exactly like when you buy the equivalent stock or ETF.
You will be able to find CFD products that track five out of the nine ARK ETFs on eToro.
|Ark ETF||Listed on eToro?|
|Ark Innovation ETF||Yes|
|ARK Next Generation Internet ETF||Yes|
|ARK Fintech Innovation ETF||Yes|
|ARK Autonomous Tech. & Robotics ETF||Yes|
|ARK Genomic Revolution ETF||Yes|
|ARK Space Exploration & Innovation ETF||No|
|The 3D Printing ETF||No|
|ARK Israel Innovative Technology ETF||No|
|ARK Transparency ETF||No|
When you are investing in eToro you know if you will know if you are investing in the underlying stock/ETF or whether it is a CFD by checking your portfolio view. If you see the ‘CFD’ acronym appear you know you eToro have not bought the underlying stock in your name and you are investing in a CFD.
Trading 212 also offers some products that will give you exposure to the ARK ETFs. Unlike eToro, Trading 212 offer leveraged shares as their solution for investing in ARK funds.
There are two different leveraged share products on offer.
ARKK Innovation Tracker – this product is designed to offer 1:1 exposure to the ARKK innovation fund minus some fees (0.36%).
3X ARKK Innovation – this product is designed to give you 3:1 leveraged exposure to the ARKK innovation fund, meaning that on a particular day if the ARK ETF price rose by 1%, the leveraged product would give you a return of 3%.
It is very important to note that at the end of every day this product needs to be re-leveraged so that means if you hold onto the product for more than one day your returns will not equal 3X of the returns of the ARK ETF. The recommended holding period is just for one day.
-3X ARKK innovation – this product works very similarly to the 3X ARKK Innovation leveraged share product but works inversely.
If the price of the underlying ETF was to decrease by 1%, then you would return a positive 3% on the leveraged product. But again, the product has a recommended hold period of just one day.
In my opinion the most straight forward way to invest in the ARK ETF funds is to use eToro as the products work in manner that is must closer to investing in the actual real thing.
Also you will be faced with less fees if you are investing with eToro as opposed to a leveraged shares product on Trading 212 which would attract fees of 0.36%.
Disclaimer: This blog post is for informational and educational purpose only and should not be construed as financial advice.