News that ARK planned a space ETF set off a rally in space stocks in January.
Bogdan Lazar/Dreamstime
The much awaited ARK Space Exploration & Innovation ETF is finally launching.
Set to start trading on Tuesday with an expense ratio of 0.75%, the actively managed fund will invest in nearly 40 stocks in four related fields of space exploration and innovation: orbital aerospace, suborbital aerospace, enabling technologies, and aerospace beneficiaries. The fund’s sponsor, Cathie Wood ‘s ARK Investment Management, defined the companies as “leading, enabling, or benefiting from technologically enabled products and/or services that occur beyond the surface of the Earth.”
Top holdings at the launch of the fund (ticker: ARKX ) will include Trimble (TRMB), specializing in areas such as geospatial, laser, and optical technologies; defense and aerospace names like Kratos Defense & Security Solutions (KTOS) and L3Harris Technologies (LHX); and Komatsu (6301.JT), a multinational company from Japan that manufactures construction and mining equipment.
The ETF also owns some names that most investors wouldn’t normally associate with space exploration. Those include Amazon.com (AMZN), Google parent Alphabet (GOOG), Netflix (NFLX), and the Chinese e-commerce giant JD.com (JD). The fund has dedicated its second-largest position to another ARK product, the $548 million ARK 3D Printing ETF (PRNT), with a 6.1% weight.
ARK Investment has attracted billions of dollars since the start of the year. Wood, the founder and CEO, was one of the most popular—and most widely debated—fund managers of 2020, known for her high hopes in disruptively innovative companies like Tesla (TSLA).
ARK currently has five actively managed ETFs, two index-tracking ETFs, and other assets for institutional investors. The seven existing funds collectively have $45 billion under management, up from $3 billion at the end of 2019. All of ARK’s active funds posted triple-digit returns in 2020.
The ARK Space ETF would be the firm’s eighth ETF and its first launch in two years. Its latest fund was the $4 billion ARK Fintech Innovation ETF (ARKF), which opened in 2019. The space fund comes at a time as an increasing number of private space companies are getting ready to go public later this year through either traditional initial public offerings or via special-purpose acquisition companies. In the past six months, at least half a dozen space companies have announced SPAC deals.
News that ARK had filed for the Space fund on Jan. 13 sparked a rally in space stocks. Shares of Virgin Galactic (SPCE), a commercial spacecraft company, and Maxar Technologies (MAXR), a space communications company, rose by nearly 20% on the following day. Virgin Galactic will have a weighting of about 2% in the ARK Space ETF, although Maxar isn’t on the list of initial holdings.
Wood’s optimism about the business of space exploration has also spurred strong interest in other ETFs that also invest in space, increasing the flow of money to them. The Procure Space ETF (UFO) has more than tripled its assets-––from $44 million to $132 million-––since ARK filed for its Space ETF. The SPDR S&P Kensho Final Frontiers ETF (ROKT) has seen its assets grow from $13 million to $24 million.
The two funds have returned 12.3% and 4.5% year to date, respectively, while the S&P 500 is up 5.7%.
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