Europe’s thematic ETF provider, Rize ETF, has been acquired by ARK Invest LLC, the parent of ARK Investment Management LLC, the investment manager led by CEO Cathie Wood.
The firm writes that Rize ETF’s founders will remain with the enlarged company ‘steadfast in their commitment to develop and deliver its products in the manner that has garnered acclaim across Europe’.
By merging Rize ETF’s expertise in thematic and sustainable index investing with ARK’s innovative actively managed approach centred on disruptive innovation, the firm writes that the combined entity will offer its clients a more diverse array of investment options.
ARK writes that this acquisition marks a step for its global expansion strategy and will pave the way for the firm to introduce its suite of innovation ETFs, under the UCITS framework, to investors across Europe, the United Kingdom, and beyond, while also facilitating the sustained growth and expansion of Rize ETF’s thematic and sustainable index ETFs in Europe and around the world.
Founded in London in 2019 by ETF industry veterans, Stuart Forbes, Rahul Bhushan, Jason Kennard and Anthony Martin, Rize ETF has become known across Europe for its thematic and sustainable index ETFs. Prior to Rize ETF, the founders were integral to the building out of the European UCITS ETF business for ETF Securities, which was acquired by Legal & General in 2018. All of the founders will remain and continue to lead the growth and development of ARK Invest Europe.
Cathie Wood, Founder, CIO, and CEO of ARK Invest says: “Today’s acquisition advances ARK Invest’s commitment to offer high-quality thematic investment solutions to a global investor audience, particularly European investors who have not been able to access our products. We believe that the European ETF market presents a strong growth opportunity as new and younger investors continue to gain access to ETFs via the growth of digital platforms, and as active ETFs increase market share by meeting the demand for innovative investment exposures.
“We are delighted to welcome the talented Rize ETF team into the ARK family. By merging its passion for thematic and sustainable index investing with ARK’s innovative actively managed approach centred on disruptive innovation, we can offer our clients a more diverse array of investment options to invest in the future. Together, we will continue to educate and empower investors, helping them to achieve their long-term financial goals.”
Stuart Forbes, Co-Founder of Rize ETF says: “The acquisition offers ARK an entry into the European ETF market, capitalising on our expertise and track record in building multiple European ETF businesses. Leveraging ARK’s global network and our expertise in European distribution, we aim to strengthen our collective global presence. This initiative signifies not just business growth, but a collaborative exchange of global asset management best practices, insights and tactics.”
Rahul Bhushan, Co-Founder of Rize ETF, says: “Over the past five years, we’ve carved out a niche in thematic and sustainable ETFs. Uniting with ARK, a frontrunner in disruptive innovation investing and research, we are poised to offer an augmented product lineup spanning three pivotal growth areas in European ETFs: thematics, sustainability and actives. This collaboration not only facilitates a broader selection for our clients but also fosters a deeper engagement with research, steadfastly upholding our mutual dedication to sustainability.”
In the coming period, the Rize ETF name and brand will gradually be retired to pave the way for “ARK Invest Europe”. Under the new ARK Invest Europe platform, existing Rize ETF index products will be distributed under the “ARK” prefix.
ARK Invest Europe writes that: “It will continue to uphold the high standards of investment research, portfolio management and client service for which ARK is known, all while tapping into Rize ETF’s deep expertise covering the full lifecycle of ETFs beginning with product strategy and index development, legal and regulatory, tax, portfolio management and operations, capital markets, research, and marketing and distribution.”
ARK purchased Rize ETF from AssetCo, a UK asset and wealth management business primarily involved in acquiring, managing, and operating asset and wealth management activities and interests, together with other related services. As part of this agreement, ARK and AssetCo will partner to support the launch, on the newly established ARK Invest Europe platform, of several ETF products for the River and Mercantile business, AssetCo’s active equity asset management subsidiary.
ARK is minority-owned by Nikko Asset Management. As of August 31, 2023, Rize ETF managed USD452 million across 11 UCITS ETFs classified as either SFDR Article 8 or 9, domiciled in Dublin and distributed throughout Europe. ARK manages approximately USD25 billion in ETFs and other products globally.
Commenting on the news, Hector McNeil, co-Founder and co-CEO of HANetf, says: “The news that ARK Investment Management has acquired a majority stake in Rize ETF shows that the trend of US ETF managers coming to Europe is picking up pace. The major shock of this is that we are seeing the entrance of the first pure, superstar active ETF manager from the US, where there has been explosive growth in actively managed ETFs. While active ETFs still account for less than 6 per cent of the US ETF market, they managed to garner 22 per cent of total net flows in the first six months of 2023, according to data from Morningstar Direct. At the same time, almost 70 per cent of ETFs launched in the first half of 2023 in the US were active.
“The new launches and the deluge of conversions from mutual funds to ETFs shows that this isn’t a trend, it is a revolution. Cathie Wood and ARK’s move will kick start the European active ETF revolution into gear and will wake up the sleepy traditional active mutual fund world which will no longer be able to kick the ETF can down the road and will have to wake up and take action.”