Ark’s New “DIET” ETF: Why It Leaves Investors Hungry
Cathie Wood’s Ark Invest has never been accused of being boring. From Tesla moonshot calls to crypto-fueled optimism, Ark has built its brand on betting big on disruption. But the firm’s latest product, the “DIET ETF”,feels less like innovation and more like financial theater.
On paper, DIET looks clever. The name alone is marketing genius. Who doesn’t want to cut the fat and still get the flavor? But once you look at the mechanics, you realize this is less a “new recipe for investing” and more a marketing mirage designed to make simplicity look sophisticated.
What Is the DIET ETF?
According to Ark, DIET is an options-based fund designed to smooth the volatility of their flagship innovation ETF, ARKK. The goal: protect investors from catastrophic losses but also limit the upside. In practice, that means investors in DIET can expect capped losses and capped gains, packaged neatly in a tradable wrapper.
The Big Problem
Here’s the issue: DIET’s payoff profile is strikingly similar to a much simpler strategy:
Put half your money into ARKK.
Put the other half in a high-yield savings account.
Voila. You’ve essentially limited your downside to 50%, limited your upside to 50%, and—bonus—your “cash” portion earns a safe yield instead of being eaten away by option premiums. No convoluted structure, no management fees, no complexity.
Why Complexity Sells (But Simplicity Wins)
This gets to the heart of modern asset management. Complexity is marketable. “Structured downside protection” sounds far sexier than “buy half as much and park the rest in cash.” DIET isn’t selling investors a better mousetrap, it’s selling the illusion of sophistication.
The tragedy here is that most investors would be better served with the simple half-and-half approach. They’d get a cleaner return profile, likely stronger long-term results, and none of the embedded drag from option costs. But “DIY DIET” doesn’t make Ark management fees.
Why It Doesn’t Make Sense
You’re paying extra for less yield. Options aren’t free. That “insurance” baked into DIET eats returns.
Upside caps hurt long-term compounding. Innovation investing is already volatile. If you believe in ARKK’s moonshot thesis, why buy a fund that clips your wings at 50%?
It infantilizes investors. Bumpers might help a 7-year-old bowl, but serious investors shouldn’t need their ETF manager to pre-decide their risk tolerance.
The cash alternative is obvious. Splitting ARKK and cash yourself is cheaper, simpler, and smarter.
The Takeaway:
DIET is clever branding but empty calories. Ark is essentially asking investors to pay for a product that replicates something they could do themselves in five minutes with a brokerage app and a savings account.
The lesson here isn’t just about DIET. It’s about remembering that Wall Street rarely sells what’s optimal—it sells what’s marketable. And while flashy structures may make headlines, sometimes the boring plate is the healthier one.