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What is the target hold period? Should I hold longer than one year?​

The target hold period for a buffered ETF, such as the ARK Defined Innovation Exposure Term (DIET) ETFs is at least 12 months or in 12-month increments the length of the defined outcome periods.

This is important because: 

  • The buffer, hurdle, and participation rate are all designed to work over that specific time frame. 
  • If an investor holds the ETF for the full year, they’re more likely to experience the defined outcome as intended. 

What happens after that year? 

  • The ETF does not automatically sell shares or end investments. 
  • Instead, it resets: a new 12-month period begins with new terms based on current market conditions. 
  • If an investor stays invested, they begin a new outcome cycle, with a new buffer and upside structure. 

    Should an investor hold longer than a year? That depends on the investor’s goals: 

    • If the investor wants to participate in the new terms, continuing to hold could make sense. 
    • If the investor has met their investment objective or needs to rebalance their portfolio, they might choose to sell at the end of the term. 

    Either way, it’s helpful to review the buffered ETF at the end of each 12-month term to see if the new outcome setup fits the investor’s current needs.