Cathie Wood’s Ark Invest Buys Rize ETF to Expand in Europe

Inflows into thematic innovation ETFs have been higher in Europe than in the U.S. this year.  

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Finance Reporter
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Reviewed by: etf.com Staff
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Edited by: Mark Nacinovich

Ark Invest, an investment firm led by famed investor Cathie Wood that offers thematic ETFs, bought European-based Rize ETF Ltd., an ETF issuer that also specializes in thematic investing.  

In its first acquisition of another investment firm, Ark, which has $13 billion in eight ETFs, purchased Rize from U.K.-based AssetCo on Sept. 19. Rize, which was founded in 2019, has $452 million in 11 exchange-traded funds, according to a press release announcing the deal. The firm focuses on thematic and sustainable investing. The companies didn’t disclose terms of the deal. 

“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,” Ark CEO Cathie Wood said in the statement.  

The firm will adopt the name of “ARK Invest Europe”, and the company will feature its line of current ETFs under the UCITS structure for European and other international investors.  

Growth of Thematic Funds in Europe 

The acquisition comes as active and thematic ETF growth surges in Europe and across the globe. Year to date, inflows into Europe thematic funds have reached roughly $4 billion, while inflows in the U.S. thematic funds have been under $3 billion, according to Deborah Fuhr, founder and managing partner of ETFGI, an ETF research firm. 

“Active ETFs have been growing at a faster rate than the rest of the market, so it's still small size, but punching above its weight,” said Bryan Armour, ETF analyst at Morningstar. “So [Wood] sees this as a good time to have a first mover advantage.”  

While Ark’s U.S. ETFs have garnered billions, it is more tax efficient for international investors to buy the funds under the UCITS structure than on U.S. exchanges, according to Fuhr.  

“The benefit [of the acquisition] is, you're basically buying capability, as well as launching a platform and the ability to cover non-US investors,” she said.  

Thematic ETF Enthusiasm Wanes in U.S.

Despite the growth of active ETFs across the board, thematic-focused funds have lost their luster to many investors. Roughly $2.6 billion has exited thematic funds in 2023, according to Bloomberg. Yet excitement about thematic funds in Europe, especially demand for climate- and ESG-related ETFs, could be driving demand from outside the U.S., analysts say. 

“Some of their growth has stalled out in the U.S., and they might be looking for new opportunities to add new investors and so that's where Europe really gives them an opportunity to do that,” Armour said.  

The announcement comes as more firms are seeking to break into the ETF industry or increase their own product offerings through acquisitions. TCW Group announced it would acquire Engine No. 1’s $600 million suite of ETFs in July. Fuhr noted that more acquisitions could be coming down the pipeline for ETF managers as the industry grows and asset managers seek to scale their products.  

“When these asset managers look at ‘how do you cover the rest of the world?’, they end up finding out that they need to have some form of a UCITS product offering,” Fuhr said. “Then question is: Do you buy something? Do you build something? Or do you use a white label? Platform? That is the challenge and opportunity.”  

Lucy Brewster is a finance reporter at etf.com covering asset managers, emerging technologies, and regulation. She hosts etf.com webinars and appears on Exchange Traded Fridays, etf.com’s flagship podcast. She previously was a finance fellow at Fortune Magazine where she covered markets, investment strategy, and venture capital. She has also been a freelancer writer at the publication Mergers & Acquisitions and a research fellow at the Historic Hudson Valley. 

She graduated from Vassar College in 2022 with a degree in History and was an editor of The Miscellany News, the college's award winning student run newspaper. 

Lucy lives in Brooklyn, NY, and in her free time she loves to run and find new recipes to cook.