CATHIE WOOD’S ARK INVEST INTRODUCES ARKX SPACE EXPLORATION ETF
Wow! Space is really the final frontier! Cathie Wood is riling up the cult of Ark as she is landing yet another ETF according to an SEC filing from the ARK ETF Trust.
ARKX aka the Ark Space Exploration ETF. According to the filing, in true ARK form, we will see the ARKX fund become another actively managed fund. See more below from the SEC filing. Pretty straight forward!
“The Fund is an actively-managed exchange-traded fund (“ETF”) that will invest under normal circumstances primarily (at least 80% of its assets) in domestic and foreign equity securities of companies that are engaged in the Fund’s investment theme of Space Exploration and innovation. The Adviser defines “Space Exploration” as leading, enabling, or benefitting from technologically enabled products and/or services that occur beyond the surface of the Earth.”
In selecting companies that the Adviser believes are engaged in the theme of Space Exploration (“Space Exploration Companies”), the Adviser seeks to identify, using its own internal research and analysis, companies capitalizing on disruptive innovation. The Adviser defines “disruptive innovation” as the introduction of a technologically enabled new product or service that the Adviser expects to change an industry landscape. The Adviser’s internal research and analysis leverages insights from diverse sources, including external research, to develop and refine its investment themes and identify and take advantage of trends that have ramifications for individual companies or entire industries.
The Adviser believes that Space Exploration Companies can be grouped into four overarching categories, each of which contains relevant sub-elements. Orbital Aerospace Companies are companies that launch, make, service, or operate platforms in the orbital space, including satellites and launch vehicles. Suborbital Aerospace Companies are companies that launch, make, service, or operate platforms in the suborbital space, including drones, air taxis and electric aviation vehicles. Enabling Technologies Companies are companies that create the technologies required for successful value-add aerospace operations, including artificial intelligence, robotics, 3D printing, materials and energy storage. Aerospace Beneficiary Companies are companies that stand to benefit from aerospace activities, including agriculture, internet access, global positioning system (GPS), construction and imaging. Space exploration is possible due to the convergence of a number of themes, and a Space Exploration Company may not currently derive any revenue, and there is no assurance that such company will derive any revenue from innovative technologies in the future.
The Adviser will select investments for the Fund that represent the Adviser’s highest-conviction investment ideas within the theme of Space Exploration, i.e., investment decisions regarded with confidence, in constructing the Fund’s portfolio. The Adviser will analyze potential investments by using both “top down” information (e.g., economy-wide analysis of facts such as rate of growth, cost declines, unit economics, sizing of markets, and price levels as well as business and technology cycle trends) and “bottom up” criteria (e.g., fundamental and quantitative metrics for individual companies such as their revenue growth, profitability and return on invested capital). Based upon its research and analysis, the Adviser will select a portfolio company that it believes presents the best risk-reward opportunities. [In both the Adviser’s “top down” and “bottom up” approaches, the Adviser evaluates environmental, social, and governance (“ESG”) considerations. In its “top down” approach, the Adviser uses the framework of the United Nations Sustainable Development Goals to integrate ESG considerations into its research and investment process. The Adviser, however, does not use ESG considerations to limit, restrict or otherwise exclude companies or sectors from the Fund’s investment universe. In its “bottom up” approach, the Adviser makes its investment decisions primarily based on its analysis of the potential of individual companies, while integrating ESG considerations into that process. The Adviser’s highest-conviction investment ideas are those that it believes present the best risk-reward opportunities.]
After an incredibly successful year, with record breaking returns and inflows on all ARK ETFs, I can only suspect that this will be another inflow and success story and Cathy and Co. target a new space, literally space itself with a closely watched range of companies in the exploration arena. I honestly couldn’t tell you more than 20 companies in this space but I’m betting we will see Defense companies, to Space tourism companies and beyond. As of January 13th, we just saw $SPCE aka Virgin Galactic skyrocket.
I have been personally investing in ARK ETFs for over 5 years and I really did not think they would get this popular amongst…well pretty much from all of the Wall Street pros to novices alike. It’s an incredible time to be an investor overall and ARK brings nothing but excitement to everything they touch. Only time will tell how long it will last, but I believe they have plenty of tricks up their sleeves to keep the waves alive and well
I will update this blog as details emerge.