ARK Invest Europe has failed to capture investors’ attention after launching three thematic ETFs earlier this year following its long-awaited entry into the European market.
The firm launched three thematic ETFs covering innovation, genomics and AI in April, after acquiring thematic specialist Rize ETF from AssetCo last September.
Since their launch, the ARK Innovation UCITS ETF (ARKK) has gathered $8.8m assets under management (AUM) while the ARK Artificial Intelligence & Robotics UCITS ETF (ARKI) has drawn in $5.1m, according to data from ETFbook.
Meanwhile, the ARK Genomic Revolution UCITS ETF (ARKG) has raised a mere $2.8m, meaning that the three ETFs in total have seen a combined $16.7m inflows.
Hesitation surrounding the range has also been born from the firm’s association as a wealth destroyer – taking out a total of $14.3bn of shareholder value over the past 10 years – alongside the view of Wood’s ill-timed entry and exits of large positions, fund selectors previously told ETF Stream.
Kenneth Lamont, senior fund analyst at Morningstar, said ARK’s slow start can be explained by Europe and the US’s diverging ETF landscapes, with much lower retail participation in Europe.
“They have also launched into particularly choppy waters,” he added.
“For context, the European ranges stateside sister funds have bled a combined $3bn year to date. In Europe, we have seen the largest thematic fund outflows on record this year.”
Extending this view, Stuart Forbes, head of ARK Invest Europe, said the firm has shown “remarkable resilience” against the current market backdrop.
“While the wider European thematic ETF market experienced substantial net outflows, ARK Invest not only defied this trend but also outperformed many of the largest ETF issuers,” Forbes said.
Thematic ETFs have seen $880m outflows so far this year. Notably, disruptive technology has seen outflows for the first time in 2024, further underpinning ARK's poor timing of its European entry.
Despite a slower than anticipated start, ARKK and ARKI have ranked among the top 50 thematic ETF inflows year to date, according to data from ETFbook.
Finally, Lamont added ARK’s decision to acquire Rize ETF was not just to enter the European market, somewhat softening the blow of their slow start in Europe.
“Building a UCITs platform allows them to build product which can be easily ported into other potential markets such Mexico and some Asian markets,” Lamont said.
Terry McGivern, senior research analyst at AJ Bell, said Wood's success in the US was mostly tied to her ability to win over the retail market, but questioned if this could be replicated in Europe.
“I do wonder which part of the market asset growth will come from,” he continued. “I suspect it will be in the more narrative, media-led FOMO end which is often dominated by retail investors, rather than institutional or adviser-led money.
“Her often clunky timing of entry and exits of large positions has allowed them to see big gains at times, but of late has also seen them suffer large and sustained drops. That sort of volatility does not lend itself well to being picked up and included in portfolios run by professional fund selectors,” he added.
