Ignites’ Jackie Noblett explores the implications of updated terms in the ARK Venture Fund’s most recent SEC filing in her new article, “Ark’s Interval Fund Casts Wide Range for Startups.” Specifically, the prospectus allows a wide 20-85% allocation to securities of private companies and the rest in public stocks.
Kimberly Flynn, XA Investments Managing Director of Alternative Investments, comments on potential challenges for this fund. For example, ARK needs “to give themselves maximum flexibility to execute their strategy, which, frankly hurts credibility,” she says. While this flexibility can be particularly important during the fund’s initial invest-up period, large allocation fluctuations can cause confusion around the fund’s investment strategy. “People will ask, ‘Well, what is this [fund?],” explains Flynn.
ARK plans to distribute the Venture Fund through the Titan alternative investments digital platform, which will charge the fund 65 basis points for distribution and shareholder servicing. The Titan platform aims to make this fund and other hedge-fund-like strategies more easily accessible to individual investors.
Given their more complex structure, interval funds also tend to charge higher management fees than ETFs, which may come as a surprise to ARK’s retail investor base. While the ARK Innovation ETF charges a 75-basis point fee, interval fund management fees for private equity or venture capital funds can climb as high as 7%. For individual investors who see high fees for this interval fund, “there’s going to be sticker shock there,” Flynn says.
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