Cathie Wood's ARK Removes Limits Restricting Investing 30% of Total Fund Assets in a Single Stock, and Owning 20% of the Total Outstanding Shares of a Single Stock

March 29, 2021 4:33 PM EDT

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Cathie Wood's ARK Investment is removing language in its prospectus that limits its active ETFs from putting 30%+ of total assets in a single company and investing in more than 20% of the total number of outstanding shares issued by a single company or fund.

According to the amendment:

The last two paragraphs of the “Additional Information about the Funds’ Investment Strategies and Risks – Additional Investment Strategies – All Funds” section of the Prospectus are hereby deleted.

Those two sentences read (being removed):

  • Each Fund will not invest more than 30% of its total assets in securities issued by a single company, fund or of short-term financial products of such company.
  • Each Fund will not invest in more than 20% of the total number of outstanding shares issued by a single company or fund.

The disclosure, first pointed out by Jeffrey Ptak @syouth1 on Twitter Friday, comes as ARK has been under fire for holding heavy concentrations in a number of stocks. It also follows the blow-up of Archegos Capital on Friday after bets-gone-wrong in its highly-leveraged and concentrated portfolio.

ARK's main fund, ARKK, currently has a 10.6% weighting in Tesla (NASDAQ: TSLA).

In addition to the amendments noted above, the fund also amended its prospectus to specify the risk of investing in SPACs, and remove limits on ADRs, warrants, preferreds.



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