🚀 ARK Invest’s NEW Fund Won’t Just Hold Stocks (Bitcoin & SpaceX?!)

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oh my god okay it's happening everybody
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stay calm what's the procedure everyone
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what's the procedure
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kathy wood just filed to launch an
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awesome sounding venture fund which
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could be the biggest piece of arkham
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vest news since they launched arcade
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their flagship innovation fund kathy
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wood has hinted at financial products
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like this several times in interviews
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over the past couple years saying that
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she wants to offer retail investors a
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public private option and that they were
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internally testing an arc on steroids
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fund that could include leverage
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why not extend your investment thesis to
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private markets and raise money to
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invest in venture capital and in growth
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equity because so many of the things
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that you're interested in
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get their start there so yes we are
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evolving some strategies we hope
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uh that next year we'll be able to
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launch something what i would love and
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it would be true to
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uh our stripes our current stripes i
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would love because i know the sec is
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opening up
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up to this i would love to be able to
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offer a public private option
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that would be available for all retail
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investors what i didn't expect was for
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all these things to possibly come
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together in one fund oh yeah and it
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could also include crypto i've linked
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the sec filing in the description below
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so you can see everything for yourself
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your time is valuable so let's get right
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into it by going over some of the
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highlights the strategy behind the fund
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is roughly the same as rk's focusing on
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investments in genomics automation
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energy transformation artificial
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intelligence next generation internet
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companies and fintech innovations which
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are all currently archinvest's core
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themes what's interesting about this
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inclusion of fintech is that this fund
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can include cryptocurrencies not just
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stocks of publicly traded companies in
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fact this newly filed arc venture fund
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will include early to late stage private
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companies as well as micro small medium
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and large cap public companies basically
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this opens the entire spectrum of
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companies from seed and series a funding
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rounds all the way to the teslas and
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possibly the spacex's of the world it
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also means that this fund could have a
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much longer time horizon than their
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actively managed etfs this will not be a
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fund for traders it's a fund for
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investors who want exposure to the
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cutting edge companies and technologies
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that archives is great at identifying
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sometimes even before they go public i'm
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thinking that this will be at least a
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10-year time horizon one interesting
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thing is that the filing allows arc to
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go into defense mode with this fund the
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fund can pursue a temporary defensive
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strategy inconsistent with its principal
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investment strategies which means it
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might not achieve its investment
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objectives 100 of the time basically
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this means that the fund is trying to
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grant exposure to the themes that i just
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called out but kathy wood would be
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willing to hold positions outside of
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those themes when innovation may not be
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the best strategy the point is that we
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could see arkhanvest actively play a
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much more defensive role inside this
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fund instead of letting it get cut in
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half in order to stay thematically
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consistent like we've seen them do with
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rk and the other actively traded funds
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it's important to call out that this is
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not going to be an etf when you buy
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shares of an etf the underlying fund
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will buy the companies that that share
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represents on that day so you're getting
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shares of its holdings at current market
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prices with a venture fund like this one
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you get a share of the investments that
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arc invests made at the price that arc
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invest made them and they get your money
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to invest in new investments going
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forward i honestly think that this is a
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much better fit for the type of research
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opportunity discovery and long time
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horizon that arkanvest is focused on
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that also means that access to the fund
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can be pretty limited it won't be a
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ticker that you can just buy on your
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trading platform the current plan for
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distribution is through an unnamed
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platform owned and operated by an
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unnamed entity with an unnamed website
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what this probably means in practice is
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that an investor can go directly to an
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arc invest website or a partner site
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fill out the correct paperwork and sign
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up to get put on a shareholder waiting
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list the minimum initial investment for
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shares of the fund is just one thousand
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dollars so pretty much one share of
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tesla stock outside of that there's no
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minimum on additional purchases after
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that initial 1000. unlike our convex
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etfs this fund can be closed that means
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jim cramer could one day actually get
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his wish of seeing kathy wood close a
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fund without sounding like a total fool
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remember kathy would close your fund
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close it listen to what the late jack
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bogle would say close it the fund may
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close at any time to new investments and
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during such closings only the
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reinvestment of dividends by existing
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shareholders will be permitted the fund
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may reopen to new investments and
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subsequently close again to new
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investments at any time at the
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discretion of the advisor so basically
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arch invest can control the rough size
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and flows of the funds and the
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investments any way they see fit the
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fund can also use leverage for up to one
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third of the fund's total assets it's
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not clear to me whether that's just low
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interest loans or if that's also going
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to include options which kathy would
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have mentioned in the past do you have
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any any plans or thoughts about about
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adding short positions uh to some one or
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more versions of your funds well we have
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uh we have internally for employees only
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we're testing out uh a portfolio uh but
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it's really arc on steroids if you can
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believe that what we would be doing
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is shorting stocks that are in the big
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benchmarks and when we get into a wrist
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off situation what happens is portfolio
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managers and analysts generally run back
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to those stocks get closer to their
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benchmarks and they dump our stocks
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which are either small parts of
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benchmarks or not in benchmarks great
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opportunity for us as we have
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experienced during these last few days
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to pick up on those stocks because it's
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simply a risk-off move to get closer to
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benchmarks and by the way we think the
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benchmarks are where the big risks are
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longer term because they are filling up
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with value traps
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so this fund has a lot of flexibilities
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in the ways that arc invest can generate
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returns for investors or expose them to
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certain themes my guess is that this
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language is just in the sec filing so
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that if arkhanvest finds what they think
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is an absolute slim dunk they can get
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the liquidity and the exposure they want
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independent of fun flows in or out
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speaking of which this fund could be
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pretty illiquid it's not currently
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intended that the shares will be listed
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on a public exchange and no secondary
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market is expected to be developed for
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these shares this fund is an interval
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fund which is a type of fund that
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provides limited liquidity to
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shareholders by making quarterly offers
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to repurchase anywhere from five to
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twenty-five percent of the shares
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outstanding at net asset value prices so
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once you're in you're in that means the
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opportunity cost for holding this fund
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could be pretty high which again means
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that this is a strategic allocation for
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committed long-term investors not
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something day traders should yellow
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their entire account into the trade-off
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is that you're getting into potential
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winners much earlier which means at much
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better valuations another important
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tidbit that could pop out of this is
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that shares of this fund could trade at
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a discount or a premium to the net value
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of the assets inside it for example say
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the fund granted you exposure to spacex
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many investors would pay a premium to
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hold spacex and if the fund contains a
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few companies like that then the fund's
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share price could be much more expensive
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than its contents when you buy but you
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wouldn't get that same premium if you
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want arc to buy those shares from you by
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default fund holders will be registered
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in a dividend reinvestment plan that
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will buy additional shares of the fund
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but investors can give written notice to
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take that dividend instead that means if
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you're in this fund for a long period of
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time your shares are hopefully going up
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in value and you're actually getting
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more and more shares as your dividends
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get reinvested
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that's actually pretty attractive over
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the long term then when you have an
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income need or you plan to retire you
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let arc invest know that you want your
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dividend instead of having it reinvested
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then if you need money beyond that you
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sell chunks of your shares back during
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those buyback windows so comment below
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or tweet me at ticker symbol u with your
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thoughts on the filing for this arc
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invest venture fund is this fund
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structure something that interests you
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what kind of companies do you think
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could be included maybe it's some of the
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companies that will also use the arc
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innovation center which is that 45 000
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square foot business incubator that
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they're building near downtown saint
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pete in florida by the way the
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groundbreaking for their innovation
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center is happening soon and when it
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does i'll start providing regular
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progress updates on twitter and
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instagram so feel free to find me at
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ticker symbol you if you're interested
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in progress picks on that as for me i'll
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definitely try to get at least a few
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shares of this fund if and when i can so
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that i can keep you up to date on the
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crazy cool early stage disruptive
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innovations that arc vest believes are
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changing our daily lives and sometimes
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our portfolios for the better that's
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just another way that this channel can
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invest in you so stay long stay strong
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and thanks for watching until next time
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this is ticker symbol you my name is
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alex reminding you that the best
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investment you can make is in you