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What happens if I buy a buffered ETF when the reference asset is up, but has not cleared the hurdle (0-5% for ARK DIET)?​

Buying a buffered ETF, such as one of ARK’s DIET Buffer ETFs, after it has gone up a small amount—between 0% and 5%—means an investor is entering before the upside hurdle is cleared, but after the price has moved a bit.

In this range: 

  • Downside protection is likely still intact, depending on how much the reference asset, for ARK DIET, ARKK – the ARK Disruptive Innovation ETF, has moved. 
  • An investor has not yet begun to participate in the upside gains, because the hurdle (for ARK DIET: 5%) hasn’t been cleared. 

This means an investor is currently in the “neutral zone” of the defined outcome: 

  • If the reference asset (ARKK) continues upward and crosses the hurdle, the investor will begin participating in gains (at the participation rate). 
  • If the reference asset (ARKK) drops, the buffer will begin absorbing losses. 

Buying in this range requires close attention to both: 

  • The current net asset value (“NAV”) of the fund 
  • The status of the outcome structure—what’s been used, and what’s left. 

ARK publishes this data regularly to help investors decide if the current entry point aligns with their goals.