Star investor Cathie Wood’s Ark Investment Management has filed for a new fund that would include private companies and would limit when investors can exit the fund.
It’s called Ark Venture Fund, and it would require a minimum investment of $1,000, according to the filing, Bloomberg reports. That would make it easy for individual investors to participate.
The idea is to find disruptive, innovative technology companies, just like for other Ark funds, but in this case they would be less liquid entities. So the fund will hold “illiquid securities and securities in which no secondary market is readily available, including those of private companies,” according to the filing, Bloomberg reports.
Wood has recently stressed that private tech companies are now valued more highly than public ones.
The Venture Fund would be a closed-end interval fund. Interval funds allow investors to sell a limited amount of shares only at regular time intervals, generally quarterly. Interval funds impose restrictions because they often hold illiquid securities that aren’t easy for the fund managers to sell.
PATRICK T. FALLON/AFP via Getty Images
Ark Has Plans for Share Buybacks
Ark plans to offer to buy back 5% of shares on a quarterly basis, according to the filing, Bloomberg reports.
The Venture Fund might attract strong demand from investors, given the loyalty of Ark fund holders.
Despite the recent slump of Ark’s exchange-traded funds, most investors aren’t abandoning them. The total investment inflow for Ark ETFs peaked at $42 billion last year, and only 25% of that money has exited, Bloomberg reports.
That’s pretty impressive given that Ark’s flagship fund, Ark Innovation ETF (ARKK), has slid 25% so far this year, after dropping 23% last year.
