The Tuttle Capital Short Innovation ETF (SARK) is an American

inverse exchange-traded fund An inverse exchange-traded fund is an exchange-traded fund (ETF), traded on a public stock market, which is designed to perform as the ''inverse'' of whatever index or benchmark it is designed to track. These funds work by using short selling, t ...

(ETF) listed on the

Nasdaq The Nasdaq Stock Market () (National Association of Securities Dealers Automated Quotations Stock Market) is an American stock exchange based in New York City. It is the most active stock trading venue in the US by volume, and ranked second ...

. The ETF launched in November 2021 and is designed to provide returns inverse, on a daily basis, of the ARK Innovation ETF (ARKK), an

actively managed Active management (also called ''active investing'') is an approach to investing. In an actively managed portfolio of investments, the investor selects the investments that make up the portfolio. Active management is often compared to passive man ...

ETF by Cathie Wood's

Ark Invest ARK Investment Management LLC is an American investment management firm based in St. Petersburg, Florida, that manages several actively managed exchange-traded funds (ETFs). It was founded by Cathie Wood in 2014. As of February 2021, the company ...

. It is the first ETF in the United States to provide inverse exposure to another ETF. It uses

swap Swap or SWAP may refer to: Finance * Swap (finance), a derivative in which two parties agree to exchange one stream of cash flows against another * Barter Science and technology * Swap (computer programming), exchanging two variables in t ...

contracts rather than short selling to achieve inverse exposure to ARKK. The Short Innovation ETF is unique in seeking inverse performance of ARKK, an actively managed portfolio of stocks, in contrast to other inverse ETFs which bet against a particular

stock market index In finance, a stock index, or stock market index, is an index that measures a stock market, or a subset of the stock market, that helps investors compare current stock price levels with past prices to calculate market performance. Two of the ...

or industry classification. Ben Johnson, director of global ETF research for Morningstar, described such a product as "unprecedented." In January 2022, ''

Mad Money ''Mad Money'' is an American finance television program hosted by Jim Cramer that began airing on CNBC on March 14, 2005. Its main focus is investment and speculation, particularly in public company stocks. Cramer defines "mad money" as th ...

'' host

Jim Cramer James Joseph Cramer (born February 10, 1955) is an American television personality and author. He is the host of ''Mad Money'' on CNBC and an anchor on ''Squawk on the Street''. A former hedge fund manager, founder, and senior partner of Cramer ...

highlighted the ETF as seeking to benefit from the weakness in growth-oriented stocks whose performance have struggled in recent months. In a November 2021 interview with

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, Wood responded to SARK and short sellers of ARKK, saying "This is what makes a market, right? I never worry about anyone shorting the stocks underlying Ark or with this new ETF," adding that if Ark Invest succeeds, investors betting against ARKK would have to cover their short positions, creating demand for Ark funds. Tuttle Capital Management filed with the

U.S. Securities and Exchange Commission The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market ...

to launch its Short Innovation ETF under the stock ticker SARK in August 2021, following a period during which Ark Invest was unable to produce high returns for investors. Amidst the outbreak of COVID-19, ARKK was one of the top-performing ETFs in 2020, but it greatly underperformed the market in 2021 amidst a shift in investor preference away from technology stocks. When SARK launched in November 2021, ARKK had a short interest of 17.3%, up from 2% in early 2021, indicating negative sentiment for the portfolio. Matthew Tuttle, CEO of Tuttle Capital Management, argued that the company's ETF was superior to short selling ARKK because it allows investors to avoid short squeezes and margin calls. The ETF had $5 million in assets at inception. It experienced a trading volume of $843,000 on its first day of trading. As of January 2022, the ETF had $234 million in assets, about $200 million of which came from investor inflows. It had returned around 50% since its inception, amidst continued declines in stock performance of high-growth companies associated with rising Treasury yields.

References

{{Reflist Exchange-traded funds