Summary
ARK Invest aims to prevent any individual holding from surpassing a 10% weighting in their ETFs to avoid excessive risk, which may require large sell offs when an asset’s value surges.
Key Points
1. ARK Invest implements a risk management strategy by capping individual holdings at a maximum of 10% of an ETF’s value.
2. This approach ensures diversification within the ETF and reduces the risk associated with a single asset dominating the portfolio.
3. Large sell-offs are necessary when a particular asset experiences a significant increase in value in order to rebalance the portfolio and maintain the desired asset allocation.