Cathie Wood’s Ark Invest is targeting interval funds as a way to bring private assets into retail-friendly, exchange-traded formats. The firm has won SEC approval for an exchange-listed share class of an interval fund, featuring an untested arbitrage mechanism designed to keep pricing aligned.
Interval funds resemble mutual funds but restrict redemptions to periodic intervals, typically quarterly, and managers may tender only a small slice of shares, sometimes as little as 5 per cent. This structure allows funds to hold illiquid private stocks without fear of fire-sales during redemption runs. However, adoption remains limited; interval funds hold just $142bn in the US, less than 0.9 per cent of the $16.2tn amassed by US-listed ETFs.
Ark’s Venture fund holds $1.35bn in assets across private companies such as Kalshi, OpenAI, Anthropic, Stripe, Wayve, Revolut, and The Boring Company, with 75 per cent of its assets in private firms. That is a fraction of Ark’s $26.1bn in total assets under management reported in February.
The SEC filing argues that brokerage platforms, especially fintechs, are not equipped to handle interval fund purchases or tenders through the NSCC system, limiting asset growth. An exchange-listed class could expand retail access to private markets through registered products. Yet the creation/redemption arbitrage mechanism used by ETFs may struggle to function with an interval fund’s restricted liquidity.
Source: Financial Times Companies · Summarized by HeadlinesBriefing