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What happens if I sell ‘early’?​

If investors sell a buffered ETF, like the ARK Defined Innovation Exposure Term (DIET) ETFs before the full 12-month outcome period ends, they may not receive the defined outcome.

Here’s why: 

  • The ETF’s value (Net Asset Value or “NAV”) changes daily based on the current market. 
  • If investors sell in the middle of the period, their return depends on how the market has moved so far and how the options contracts are valued at that moment. 

This can lead to unexpected results: 

  • Even if ARK DIET’s underlying ETF ARKK – the ARK Innovation ETF, hasn’t moved much, investors might see a loss due to time decay (the natural reduction in value of options over time).
  • If the market has moved sharply, the fund’s delta (how much it reacts to the market) may be different from what investors expect. 

In short - The defined outcome is designed for people who hold the ETF from start to finish of the outcome period. Selling early exposes investors to market forces that are more complex and less predictable.