What happens after the one-year term is up? Are my funds liquidated, or do I have to reinvest?
When the 12-month outcome period ends:
- Investments are not automatically sold.
- Investors are not forced to reinvest.
- The buffered ETF, in this case an ARK Defined Innovation Exposure Term ETF (ARK DIET), continues to trade normally, just like any other ETF.
What does happen:
- The fund’s options contracts expire and are replaced with a new set of options, creating a new defined outcome for the next year.
- This reset happens within the buffered ETF. If an individual stays invested, their shares simply follow the new structure.
An investor has two options:
- Stay invested – The investment will roll into the next outcome period automatically. The fund will publish new terms: buffer, hurdle, and participation rate.
- Sell or rebalance – If the new terms don’t suit an investor's goals, or if they need to free up funds, they can sell their shares at any time.