A massive drawdown in stocks under the thematic investing theme of disruptive innovation is a risk to consider with such a fund, particularly if the selloff turned out to be broad across the portfolio. But ARK’s research team does “deep research” on stocks that are “misunderstood,” Staudt said, as they may be creating new technologies, making them more volatile as result.
“We have conviction over a longer term,” giving the firm confidence to invest in such stocks through bouts of shorter-term volatility, he added, while also pointing to the diversification of the ETF’s autocallable notes as mitigating risk for investors.
“Autocallable ETFs will show their colors” in a bear market, said Calamos’s Kaufman. “But the ones that were built properly will likely be able to withstand a lot of the drawdown.”
Michael Humbert, a portfolio manager at Kestra Investment Management, said there’s room for “modest exposure” to autocallable ETFs in an income-focused portfolio – but investors should tread carefully given how unfamiliar and varied the structures are.
“It’s probably the most complex thing in an ETF wrapper today,” he said. “You shouldn’t be jumping into this head first without having done really strong due diligence on the products.”
-Christine Idzelis
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09-18-26 1211ET
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