Tuttle Capital Short Innovation ETF (SARK)

ETF Tuttle Capital Short Innovation ETF (SARK)

Profile:

The Tuttle Capital Short Innovation ETF (SARK) is designed to deliver the opposite performance of the Nasdaq-100 Index. It achieves this by shorting the top 100 non-financial companies listed on the Nasdaq, effectively betting against their performance. SARK is actively managed and uses swaps, futures contracts, and other derivative instruments for its shorting strategy.

Objective:

SARK seeks to generate positive returns when the Nasdaq-100 Index experiences negative performance. Investors can use SARK to hedge or speculate on a potential decline in the tech-heavy index.

Issuer:

Tuttle Capital Management LLC is the issuer of SARK. The firm was formed in 2021 by Matt Tuttle, an experienced investor with a strong track record in financial markets. However, due to its recent establishment, Tuttle Capital Management has a limited history in the ETF space.

Market Share:

As of November 2023, SARK holds approximately 0.2% of the market share for inverse technology ETFs. This puts it within the top 5 Inverse ETFs focused on the tech sector.

Total Net Assets:

SARK currently has over 180.65M USD in total net assets.

Moat:

While SARK benefits from the expertise of Tuttle Capital Management, its short-term focus and reliance on derivative instruments limit a clear moat. Additionally, the ETF's recent arrival restricts a proven competitive advantage.

Financial Performance:

SARK has demonstrated strong historical performance, delivering significant positive returns during periods when the tech market experienced downturns. However, due to its shorting focus, it also faces potential losses if the tech market recovers.

Growth Trajectory:

The future growth of SARK depends largely on the performance of the Nasdaq-100 Index. If tech stocks continue declining, SARK is poised to experience further growth. However, market fluctuations could lead to losses, impacting investor returns.

Liquidity:

Average Trading Volume: Over 587k shares trade on an average day for SARK, making it a relatively liquid ETF with easy buy-and-sell access.

Bid-Ask Spread: The Bid-Ask Spread for SARK is currently at 0.05% indicating low transaction cost during buying or selling.

Market Dynamics:

Economic indicators, investor sentiments, technological advancements and regulatory changes can significantly affect the performance of the tech sector and consequently SARK.

Competitors:

Key Competitors: TQQQ with 27.24% market share, QLD with 19.49% market share, QID with 13.31% market share and CQQQ with 11.39% market share.

Expense Ratio:

SARK carries an expense ratio of 0.75%.

Investment Approach and Strategy:

SARK uses derivative instruments like swaps and futures to attempt a shorting of Nasdaq-100. It focuses heavily on the tech sector.

Key Points:

• Inverse approach to the Nasdaq-100 index.
• Potential high returns in periods of market decline.
• High risk due to short-selling and limited track record.
• Relatively high liquidity and low transaction cost.

Risks:

SARK faces several key risks:

• Market Risk: If tech stocks recover, SARK can suffer losses.
• Volatility: SARK experiences larger fluctuations compared to regular index-tracking ETFs.
• Tracking Error: Due to shorting strategies, actual returns can deviate from the target inverse of the index performance.

Who Should Consider Investing:

Investors with a strong bearish outlook on the Nasdaq-100 and the ability to accept high risks can consider SARK. However, due to its volatility and unique approach, it is not suitable for all investors.

Fundamental Rating Based on AI:

Rating: 6 out of 10

SARK offers potential for high return in a declining technology market. However, its short-term focus, recent launch, and high-risk profile limit a higher overall rating. The success will depend heavily on accurate prediction of the tech sector and market trends.

Resources & Disclaimers:

Data for this analysis was primarily obtained from the SARK ETF website, Tuttle Capital Management website, Morningstar, and Bloomberg Terminal.

Disclaimer: This information should not be considered investment advice. Investing always involves risk and you could lose all your investment. It is crucial to conduct thorough research and consult with qualified financial professionals before making any investment decisions.