Core Insights - Recent unusual trading activities have been observed in several ARK ETFs, leading to significant asset fluctuations [1][2] Group 1: Trading Activities - Speculation surrounds the reasons for the trading spikes, with theories ranging from tax-related wash trades to retail investor interest in IPOs [2] - A notable theory suggests that a trader exploited the creation and redemption process of ARK ETFs to gain $21 million in a short period [2] - This involved borrowing shares of stocks in the ARK Innovation ETF (ARKK) to create approximately 70 million ETF shares before the Bullish IPO [2] Group 2: IPO Impact - Similar trading patterns were noted ahead of Klarna's IPO, despite ARKK not investing in Klarna [3] - The trading activities resulted in dramatic asset changes, with ARKK's assets increasing by over $3.5 billion from September 8 to 12, coinciding with Klarna's IPO [6] Group 3: Cash Allocations - Following the share creations, ARK ETFs significantly increased their cash allocations, with ARKF's cash allocation rising from 0.2% to 5% and ARKW's from 0.2% to over 2% [6] - The cash allocation change in ARKK was smaller, around 60 to 70 basis points [6] Group 4: Market Reactions - The unusual trading activities have drawn attention from industry experts, highlighting the unique situation of ARK ETFs experiencing violent flow patterns [5] - The activities are occurring outside the fund in the primary market, with market makers bearing the costs, thus insulating other ETF shareholders from these tactics [4]