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AXS Launches 2X ‘ARKK,’ Short ‘KWEB’ ETFs

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AXS’ latest funds are plays in the opposite directions of perhaps two of the biggest meme ETFs of 2021.

The AXS 2X Innovation ETF (TARK) and the AXS Short CSI China Internet ETF (SWEB) debuted on the Nasdaq Monday, sporting initial expense ratios of 1.15% and 0.95%, respectively. Both funds carry a 20-basis-point fee waiver that expires at the end of March 2023.

TARK is a double-leveraged daily bet on the ARK Innovation ETF (ARKK), the flagship fund for Cathie Wood’s high-conviction outlook on disruptive technology that soared in popularity after posting a 150.86% return in 2020.

ARKK has since struggled against broader macroeconomic head winds that have slowed growth stocks; and the ETF has posted losses of 48.3% year –to date. The fund has gained $817.66 million in net assets year –to date despite dismal returns.

Those struggles have made the Tuttle Capital Short Innovation ETF (SARK) a hit, with $433 million in net assets since its launch last November, and spurred AXS to make an acquisition bid for the entire Tuttle Capital line of ETFs earlier this month.

SWEB aims to provide the inverse of the daily return of the KraneShares China Internet ETF (KWEB), which tracks high-flying Chinese technology companies. The fund fell 15% in a matter of days last June after Beijing began punishing ride-hailing company Didi and other U.S.-listed companies.

Yet investors spurred by a buy-the-dip mentality poured a net $5.33 billion into the fund after Didi and other Chinese companies were deemed “uninvestable” by China hawks in the market.

Accessing Volatile Strategies

In an interview Friday, AXS CEO Greg Bassuk said the firm isn’t launching these funds as its own expression on the direction of Cathie Wood, disruptive technology or Chinese technology, but rather wants to give retail investors access to express their views on those investment concepts.

“What we are very bullish on in terms of thinking about those strategy categories is opening up these new points of access for individuals that want to either go short on those strategy categories or … double down on that investment exposure,” he said.

Leveraged and inverse ETFs reset their exposures daily, making them less useful for expressing a long-term view such as Wood’s oft-repeated expectations for her portfolio to soar in value in the next five years.

TARK and SWEB are also tracking volatile assets. ARKK’s six-month volatility measure is at 59 and its 12-month volatility measure is at 47, according to Koyfin data, while KWEB’s six- and 12-month measures stand at 84.4 and 67.8, respectively.

For comparison, the S&P 500’s volatilities during those six- and 12-month time periods stand at 14.8 and 11.6, respectively.

Bassuk said the new funds are meant to give investors access to trading strategies that may better suit their own shorter time frame.

“The folks that are thinking about [disruptive technology] over a five-year time horizon … I’m not sure that this would be the best mousetrap for them,” he said.

Contact Dan Mika at dan.mika@etf.com, and follow him on Twitter

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