The Cathie Wood-run Ark Invest has decided to close the Ark Transparency ETF CTRU. Here's what investors need to know.
What Happened: CTRU will stop accepting creation units effective Thursday and it will cease to trade on the CBOE BZx Exchange on July 26, Ark said in a release. A creation unit is a block of new shares sold by an exchange-traded fund to a broker-dealer for sale in the open market.
Ark attributed the action to the decision by "Transparency Global" to stop calculating the "Transparency Index" effective July 31. The company added it did not find a suitable solution even after an inquiry regarding alternative index providers.
See Benzinga's story on Ark's recent stock buys.
Why It's Important: This marks the first time Ark is closing one of its ETFs. The firm's funds have been moving southward after peaking with the coronavirus pandemic in 2020.
CTRU became effective on Dec. 8, 2021, and it mirrored the holdings of the Transparency Index, which in turn tracked the stock price movements of the 100 most transparent companies in the world.
Since its inception, CTRU is down about 34%. Its top holdings include Teladoc Health Inc. TDOC, Spotify Technology SA SPOT, Bill.com Holdings, Inc. BILL, Netflix, Inc. NFLX and Acushnet Holdings Corp. GOLF.
What's Next: St. Petersburg, Florida-based Ark said shareholders of CTRU can redeem their investment in the fund at any time by placing a request through their financial intermediary. All redemption orders will be paid for in kind.
Ark cautioned that on the closing date, shareholders may not be able to sell their shares to certain broker-dealers. Since Ark will be in process of closing and liquidating the fund's portfolio between the closing date and payable date, it will increase its cash holdings and not track its underlying index, it added.
On or about the payable date, the fund will distribute any remaining cash pro rata to all shareholders who have not previously redeemed or sold their shares, Ark said.
CTRU closed Tuesday's session up 3.32% at $13.06 but fell 0.46% to $13 in after-hours trading, according to Benzinga Pro data.
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