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Cathie Wood's ARK lands on European shores with Rize ETF acquisition

Published 09/20/2023, 11:18 AM
Updated 09/20/2023, 03:31 PM
© Reuters. FILE PHOTO: Cathie Wood, founder and CEO of ARK Investment Management LLC, speaks during the Skybridge Capital SALT New York 2021 conference in New York City, U.S., September 13, 2021.  REUTERS/Brendan McDermid/File Photo

By Bansari Mayur Kamdar

(Reuters) -Popular investor Cathie Wood is entering the European market with the acquisition of Rize ETF, but some investors are skeptical about the one-time pandemic darling's foray into the region's nascent ETF market.

Wood's ARK Invest acquired Rize ETF, a provider of thematic and sustainable investing, from British asset and wealth management business AssetCo in a private deal for an undisclosed amount on Tuesday, it said in a statement.

The Rize ETF brand will be phased out, as the platform transitions into "ARK Invest Europe."

Thematic ETFs, which usually track high-growth and volatile stocks, are seeing a recovery this year after sharp outflows last year following their pandemic-era boom, investors said.

Shares of Ark's flagship fund, ARK Innovation, have gained 33% so far this year, after two straight years of sharp losses.

"It will be interesting to see the demand for ARK products in Europe, especially after a few years of poor performance," said Laith Khalaf, head of investment analysis at AJ Bell.

"ARK now has a foot in the European door, but it still has work to do to persuade fund buyers they need exposure to their specialist, high-octane fund range."

As of Aug. 31, 2023, Rize ETF managed $452 million across 11 UCITS ETFs distributed throughout Europe, according to its statement.

ARK, meanwhile, manages nearly $25 billion in ETFs and other products globally.

ARK Invest in a statement said the acquisition was driven by dynamic shifts in the investment landscape and Europe's growing appetite for active ETFs.

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Overall, adoption of active ETFs in Europe has lagged U.S. peers, according to Kamil Sudiyarov, product manager at VanEck Europe.

European ETF assets have lagged those invested in U.S. exchange-traded funds, according to data from Morningstar Direct. As of the end of August, U.S.-domiciled ETFs had $7.48 trillion in assets, while Europe-based funds had a mere $1.65 trillion. The gap in assets invested in the actively managed ETF category is even larger, with European funds having assets of $36.14 billion compared to $441.29 billion in U.S. funds.

"Europe has a lot of catch-up to do," Sudiyarov said.

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