Have you ever heard about ARK before 2019? Humm, probably not. The company became well known during covid due to its strategy of “investing solely In disruptive innovation” for its extraordinary performance (of course) and for its founder, Cathie Wood.
There is no doubt that Cathie Wood has propelled the ARK ETF family from nearly nothing four years ago to the 16th largest issuer today. In the meantime, she became known for some enthusiastic predictions like Tesla stock reaching $4,000 in 2023 or Bitcoin rising up to $500,000.
The ARK Innovation ETF (ARKK) isn’t the company’s first ETF, but it’s become its tentpole product focusing on the team’s best ideas regardless of industry. The performance in 2023 has been great but still a long way from its previous highs.
So, can I invest in ARKK ETF as a European or UK investor?
Sort of. You cannot buy the ETF directly because US-listed ETFs do not comply with the European UCITS regulation. The ARK Innovation ETF is a US ETF, as you may notice by its ISIN starting with “US” (US00214Q1040).
Why is that? Because in 2018, the European legislation, when PRIIPs came into force alongside the MiFID II rules, required new Key Investor Information Documents (KIDs) in the language of each European country. Most ETF providers decided it was not worth the effort (to be honest, some of the biggest ETF providers already had a European version of their US ETFs).
Thus, if you search in any European broker for “ARK innovation” or “ARKK,” you will notice that, most likely, no result will appear unless… It is a contract-for-difference (CFD).
A CFD allows you to get the same returns (positive or negative) as you would get by investing directly in the asset by replicating it or increasing the expected returns by providing you leverage. So, a CFD can give you the same exposure to the ARKK ETF by mimicking its daily movements (1-to-1 or even in a leverage format). This is called indirect exposure since you do not own the asset.
How accurate is the replication?
In eToro, an online broker with over 30 million users, you can buy a CFD of ARKK. As previously stated, in practice, owning the ARKK ETF or a non-levered CFD of ARKK ETF should give you a very similar performance, as shown here (performance from 21/03/2022 to 20/03/2023):
ARK Innovation ETF:
CFD on ARK Innovation ETF:
As you can notice, the “real” ARK Innovation ETF had a one-year performance of -40.26%. On the other hand, the CFD on ARK innovation ETF had a one-year performance of -40.27% for the same period.
In eToro, you will not incur any overnight or weekend fees for using a CFD to trade ARKK ETF when using an “X1 leverage” factor. In other words, a 1% move in the ETF will dictate a 1% move in the CFD. Still, if you want to get more aggressive, you can leverage your exposure up to 5 times (additional leverage fees will apply). The only fee you will face is the spread for buy/selling, which, for US-based instruments, is 0.15%.
This is what it looks like before giving a buy/sell order:
For more information on the platform, check our eToro review.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Pros and Cons of using a CFD in eToro to invest in ARKK ETF
- You get a 1-to-1 exposure (non-leverage replication)
- No overnight or weekend fees (as opposed to leveraged CFDs)
- Ability to go long and short
- Wide range of trading opportunities
- You do not own the asset (ARKK ETF, in this case)
- Leverage risks (in case you go for the leverage versions)
- Spread fees
Other European brokers that allow indirect exposure to ARKK ETF
1# Trading 212
Investing involves risk of loss.
Trading 212 at a glance
Trading 212 allows you to get the same indirect exposure to the ARK Innovation ETF through “trackers,” namely the “LS ARK Innovation Tracker ETP.” As you can see in the image, it gives you access to it through three different currencies (EUR, USD, and GBP):
In addition, you have access to leveraged trackers: “3x” and “-3x”, meaning you can go long or short, respectively, with a more aggressive exposure.
The non-leveraged ETFs, the one highlighted in the previous image, present an annual cost of 0.36%, which is worse when compared to the version shown on the eToro platform.
As a side note, Trading 212 is offering one free share worth up to €100! It may be worth checking that out. For more details, check our Trading 212 review.
77% of retail CFD account lose money.
XTB at a glance
XTB also allows you to get on board in the ARK Innovation ETF through an ETF CFD. Contrary to what happened in eToro and Trading 212, here you have no option to get a 1-to-1 exposure. As seen below, you can only invest with a leverage factor of 5, meaning €100 invested is, in reality, €500 invested (€100 yours plus €400 borrowed). So, additional fees will be applied.
For more details, check our XTB review.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Is ARK Innovation ETF available in DEGIRO?
No, it is not. DEGIRO does not offer CFD products, so you cannot get exposure to the ARK Innovation ETF.
Is ARK Innovation ETF available in Freetrade?
No, it is not. Freetrade does not offer CFD products, so you cannot get exposure to the ARK Innovation ETF.
Is ARK Innovation ETF available in Trade Republic?
No, it is not. Trade Republic does not offer CFD products, so you cannot get exposure to the ARK Innovation ETF.