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Friday, July 29, 2016

Three Factors Drove This ETF Shop's Deal

Reported by Neil Anderson, Managing Editor

Three factors drove ARK Investment Management [profile] chief Cathie Wood's move to sell a piece of the company to manager-of-managers American Beacon [profile].

Catherine Wood
ARK Investment Management, LLC
Founder and Chief Executive Officer
"American Beacon provides distribution excellence, increased opportunities for growth, and capital," an ARK spokeswoman tells MFWire. "We believe each of these will help ARK to grow and provide the benefits of innovation-focused investing to new investors."

Earlier this month American Beacon CEO Gene Needles confirmed that the Irving, Texas-based, subadvised mutual fund shop just bought a minority stake in New York City-based active ETF shop ARK. American Beacon chief operating officer Jeff Ringdahl later told MFWire that it was the ARK team's "investment expertise", not ARK's ETF capabilities, that drove American Beacon's interest in the deal.

The private equity-backed holding company above American Beacon is now above ARK, too, with that minority stake. Watch for the American Beacon team to bring their distribution capabilities to bear to support ARK.

Gene L. Needles Jr.
American Beacon Funds
Chairman, President, Chief Executive Officer
"We will put a formal agreement in place between the two affiliates" within "the next 30 days," Ringdahl says.

"ARK is built to scale if needed," the ARK spokeswoman says.

The spokeswoman notes that, while Wood herself is "the largest shareholder in ARK", all 15 of ARK's employees and "ARK's external Board of Advisors" are also shareholders in the company.

As of July 13, ARK had $275 million in AUM. It offers four ETFs and separately managed accounts. This month ARK launched a fifth ETF, the 3D Printing ETF (PRNT on the BATS ETF Marketplace).

"ARK is also about to launch Australian Separately Managed Accounts with an Australian Partner for each of the strategies that ARK manages," the spokeswoman adds. 

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