ARKK - KIID problems

[Peter1B1]

Hi, Further to the recent Schiehallion thread I would add ARKK to a small group of forward focussed, growth-only collective investments that are of considerable interest to me: but remain unavailable to UK investors.

The investments are attractive to me because they are firmly anchored in the future, disruptive innovation being the core ARKK theme. They take little to no account of historic performance (many are start-ups), address complex and pioneering science and technology-based ideas, many of which are at the start of perhaps long-term growth – or dismal failure. They put their investors' money where their mouth is through sub-sector funds and the flagship ARKK.

US-based as an actively managed ETF, it is illegal for retail investors to buy from UK owing to the EU MIFID regulations - to which UK seems to be still tied. A collective instrument, I understand, requires a KIID before it can be sold. Retail investors can’t, it appears, be trusted to make their own investment decisions without their hand being held by the State. So the US investment organisation has to produce this piece of EU (and I guess still UK), regulatory flatulence, which I suspect is not at the top of their priorities. I think the same requirement applies for BG Schiehallion.

ARKK appears transparent about its investments and thinking. Its web site, webinars and monthly reports are comprehensive and there seems, to me, to be good overall governance in the experienced hands of Catherine Wood, CEO. I don’t have a position in ARKK but would like to develop stakes into long-term family investments that are still in growth phase.

Do Fools anticipate any changes to the MIFID/KIID rules, post Brexit? Is there a case for their relaxation, despite the risk of opening up disreputable investments to the unsuspecting – though current rules don’t seem to stop that happening anyway?

Peter1B1

[Lootman]

You may care to read this recent topic where the topic was discussed:

viewtopic.php?f=26&t=27216

[Peter1B1]

Lootman, so very interesting - thank you. I may explore the Charles Schwabb route for the active ETF ARK# series. But the ability to ISA-shelter is attractive as well so maybe better to wait until KIID etc is in place. I have raised an enquiry with Nikko Asset Management who may be ARK#'s 'runner' in this area.

You said you were dipping your toe in to ARKK - may I ask if you have done that and if so, how?

[Noslien]

Worth reading this article regarding ARK https://www.morningstar.co.uk/uk/news/2 ... e-dog.aspx

Ark was recently described on an advfn bulletin board as " If you're not up to speed on ARK think Woodford on crack. Double crack with extra smack and wizz."

Watch for outflows on Ark funds if they start to move quickly, be on the right side of the line.

[SalvorHardin]

The KIID rules are nonsense, if only because they ignore the possible benefits of borrowing for a fund.

As to American domiciled funds for non-American investors, there should be a warning because of America's tax rules.

Those of us who are old enough may remember the robot from Lost In Space shouting "Danger Will Robinson, Danger". Yes, that bad a warning.

I won't touch an American domiciled fund with a bargepole because American tax law treats realised capital gains within the fund as belonging to the investors as chargeable personal gains, tax payable to Uncle Sam via a American tax return. This could get messy for British investors.

Occasionally I end up with shares in an American LLP thanks to spinoffs from Brookfield Asset Management. I dump these as soon as possible because their dividends are taxed by the IRS as American earnings from a partnership and you have to complete an American tax return. Nightmare!

[Alaric]

I won't touch an American domiciled fund with a bargepole because American tax law treats realised capital gains within the fund as belonging to the investors as chargeable personal gains, tax payable to Uncle Sam via a American tax return. This could get messy for British investors.

If the administrator had filled in the paperwork correctly, would holding the fund in a SIPP avoid this problem? That would still leave the KIID issue.

[toofast2live]

I very quickly opened an eToro account and can trade ark and other us shares easily. And if you feel you want a dalliance on the dark side you can short them when they inevitably implode. The downside is they only transact in dollars but the upside is there are NO CHARGES for dealing.

[Urbandreamer]

I very quickly opened an eToro account and can trade ark and other us shares easily. And if you feel you want a dalliance on the dark side you can short them when they inevitably implode. The downside is they only transact in dollars but the upside is there are NO CHARGES for dealing.

As far as I know retail investors can't short shares without a CFD or spreadbet account. eToro does offer a CFD account, however it's NOT FREE OF CHARGES.
https://www.etoro.com/trading/fees/#cfds
The "NO CHARGES" is actually no commision if you go long or sell your holding. I also doubt that you can avoid stamp duty if it's applicable.