Cathie Wood-Led Ark Launches Buffer ETFs For Its Flagship ARKK, Analyst Says It's Like Diet Soda — 50% Loss Protection, But There's A Catch

Cathie Wood'sArk Investment Management has filed plans to launch four new exchange-traded funds designed to offer downside protection for investors in its flagshipARK Innovation ETFARKK, while placing a cap on potential gains.Check out the current price ofARKK stock here.What Happened:Last week, Ark filedwiththe SEC for four new funds, the ARK Q1, Q2, Q3, and Q4 Defined Innovation ETFs, which will each operate on a rolling 12-month cycle beginning in January, April, July, and October, respectively.Referred to as “buffer ETFs,” they are mostly aimed at limiting potential losses at the firm’s Ark Innovation ETF to 50%, over their respective timeframes. However, they will only participate in ARKK's gains if the underlying fund rises more than about 5% over that same period, according to a report by Reuters.See Also:Cathie Wood Doubles Down On Tesla Amid Elon Musk’s Feud With Trump, Sells $3 Million Worth Of Coinbase StockThis marks Ark’s entry into the growing buffer ETF market, which has been gaining traction in recent years as investors seek a more measured approach to equity market volatility.Newly Launched BufferETF Name (Ticker)ARK Q1 Defined Innovation ETF (ARKI)ARK Q2 Defined Innovation ETF (ARKJ)ARK Q3 Defined Innovation ETF (ARKL)ARK Q4 Defined Innovation ETF (ARKM)With this, the Ark joins the ranks ofBlackRock Inc.BLK,Allianz SEALIZFandInnovator ETFsby Capital Management LLC, which have several such products in the market.According toEric Balchunas, senior ETF analyst at Bloomberg Intelligence, “These are like Diet Ark. Investors are probably telling them, ‘we like the taste and the kick but would like to trim the caffeine and sugar.'”“So maybe they would like to give up a touch of upside for some sleep at night for the downside,” Balchunas says, as reportedbyBloomberg.CompanyPortfolio Weight2025 YTD ReturnTesla Inc.TSLA9.89%-22.50%Coinbase Global Inc.COIN8.48%+38.84%Roku Inc.ROKU7.65%+18.22%Roblox Corp.RBLX6.41%+83.14%CRISPR Therapeutics AGCRSP5.41%+23.53%Robinhood Markets Inc.HOOD5.40%+136.97%Circle Internet GroupCRCL4.80%+149.26%Shopify Inc.SHOP4.71%+8.49%Tempus AI Inc.TEM4.63%+69.37%Palantir Technologies Inc.PLTR4.15%+85.02%Why It Matters:Last week, Proshareslaunched buffer ETFsthat reset daily, without lock-in periods that last for an entire year. The fund house employs a patent-pending methodology that protects investors from daily drawdowns, while still providing exposure to potential gains.Ark’s funds have beencaught in the crossfirein recent months, particularly due to its exposure to Tesla, which witnessed sharp drawdowns in response to the ongoing feud between CEOElon Muskand PresidentDonald Trump. The buffer ETFs are aimed at protecting investors from such volatility.This kind of protection is particularly suited for the Ark Innovation ETF, given its exposure to speculative and disruptive technologies. In 2022, the fund witnessed a steep 66.9% pullback owing to the same.Price Action:The Ark Innovation ETF was down 0.91% on Monday, trading at $70.44 and is up 0.06% after hours.According toBenzinga’s Edge Stock Rankings, the Ark Innovation ETF has an unfavorable price trend in the short, medium and long terms, but how does it compare with other related ETFs? Clickhereto find out more.Photo courtesy: ChrisStock82 / Shutterstock.comLoading...Loading...Read More:Cathie Wood Questions Big Movement In Old Bitcoin: ‘Part Of A Government Settlement Deal?’ALIZFAllianz SE$302.09-25.5%OverviewARKKARK Innovation ETF$70.39-0.98%BLKBlackRock Inc$1075.97-0.57%COINCoinbase Global Inc$356.650.24%CRCLCircle Internet Group Inc$206.009.13%CRSPCRISPR Therapeutics AG$51.00-2.24%HOODRobinhood Markets Inc$93.48-0.97%PLTRPalantir Technologies Inc$138.693.22%RBLXRoblox Corp$107.303.58%ROKURoku Inc$88.05-0.25%SHOPShopify Inc$116.770.21%TEMTempus AI Inc$58.13-4.66%TSLATesla Inc$295.60-6.26%Market News and Data brought to you by Benzinga APIs© 2025 Benzinga.com. . .EarningsAnalyst RatingsOptionsDividendsIPOsDate of Trade▲▼ticker▲▼Put/Call▲▼Strike Price▲▼DTE▲▼Sentiment▲▼Click to see moreOptionsupdatesOptions ActivityIdentify Smart Money MovesSee what positions smart money is taking on your favorite stocks with the Benzinga Edge Unusual Options board.Click to JoinPosted In:Specialty ETFsOptionsMarketsETFsCathie WoodDonald TrumpElon MuskEric Balchunas