ARK launches Transparency ETF

Dec 8th, 2021 | By | Category: Equities

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ARK Investment Management has launched a new thematic equity ETF targeting companies exhibiting the most robust levels of trust and corporate transparency.

ARK launches Transparency ETF

The ETF targets 100 companies worldwide with the highest levels of trust and corporate transparency.

The ARK Transparency ETF (CTRU US) has been listed on Cboe BZX Exchange with an expense ratio of 0.55%.

According to ARK, highly trustworthy and transparent companies enjoy less friction, superior corporate cultures, and greater innovation, factors that lead to higher levels of growth.

Cathie Wood, Founder, CEO, and CIO of ARK Investment Management, said: “ARK believes that transparency serves as a catalyst for innovation and positive change, enhancing the performance of companies while benefiting the well-being of all. Transparency implies openness, communication, accountability, and trust, and should be a cornerstone of modern society and business.

“Given our own belief in the value of transparency, we were impressed by the methodology to determine the most transparent companies in the world, and we are excited to bring this truly innovative fund to the market.”

Methodology

The fund is linked to the Transparency Index which consists of the 100 most transparent companies in the world based on a proprietary scoring methodology developed by index provider Transparency Invest.

Constituents are selected from an initial universe consisting of US-listed equities and American Depository Receipts (ADRs) of companies with market capitalizations above $3 billion. Pre-revenue firms are ineligible for inclusion.

An initial ESG screen removes companies operating in controversial industries including alcohol, chemicals, confectionary, fossil fuels, gambling, metals & minerals, oil & natural gas, and tobacco.

The methodology selects stocks based on a Transparency score derived from six factors: Transparency Benchmarks (the quality of reporting in company documents), Terms (the use of simple, easy-to-understand language in company documents), Accountability (whether a company is acting on its standards and terms), Cost (whether the total price of a company’s goods and services is openly displayed in an understandable way), Truth (reflected by the total number of lawsuits against the company over the past 12 months), and Trust (the degree to which customers and employees trust the company).

Chosen constituents are equally weighted, and the index is rebalanced on a quarterly basis.

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