Ark Invest’s portfolio reorganization, complete sale of GBTC shares and shift to Bitcoin futures ETF

10 months ago 75

ARKW reorganization

Ark Invest, led by Cathie Wood, has reportedly sold all of its holdings in Grayscale Bitcoin Trust (GBTC) in an aggressive portfolio reshuffling. ARK Next Generation Internet ETF (ARKW), an actively managed exchange-traded fund (ETF), had invested $130 million in GBTC as of the end of November, making it the third-largest allocation within the portfolio. was.

According to Bloomberg analyst Eric Balchunas, Ark Invest will invest $100 million, or half of the proceeds from the sale of Grayscale Bitcoin Trust (GBTC), into the Bitcoin futures ETF BITO. I spent it on. This makes Ark Invest the second largest investor in BITO.

Today ARK sold its entire remaining $GBTC position (it was ARKW’s biggest holding only a month ago) and used half the money $100m-ish to buy $BITOlikely as liq transition tool to keep beta to btc while it legs into $ARKW or $ARKB. End of an era. h/t @DilksJay @funwithnumberz pic.twitter.com/J1i92qcmzo

— Eric Balchunas (@EricBalchunas) December 28, 2023

Balciunas points out that Ark is using BITO as a “temporary parking lot” and as part of a short-term investment strategy rather than as a medium- to long-term investment destination. He said institutional investors such as Ark Invest prefer to use liquid ETFs to redeploy assets, and that these are temporary funds for larger strategic shifts. It often serves as a receptacle.

Balciunas calls this strategy prudent, saying it helps increase the assets under management (AUM) of his ETF and reduces the risk of increasing annual expense ratios for investors. This will allow Ark Invest to reduce the cost burden for investors while increasing the appeal of its ETFs.

Since GBTC has a relatively high annual fee of 2%, Ark Invest seems to have decided to sell this and reinvest some of the funds into BITO. This appears to allow Ark Invest to pursue a more efficient and flexible investment strategy while maintaining exposure to the Bitcoin market.

The company also sold 148,885 Coinbase shares worth $27.5 million through the ARK Next Generation Internet ETF (ARKW).

CEO Cathie Wood recently said on CNBC that the ARK 21Shares Bitcoin ETF, which Ark Invest co-filed with 21Shares, will likely be approved by the SEC by January 10 next year. Market analysts believe the SEC may approve multiple Bitcoin ETFs to avoid becoming a “kingmaker.”