Ark Invest's New Space Travel ETF Is Poised for the Market


Jan. 14 2021, Published 11:03 a.m. ET

Even with all the background noise, 2020 was a solid year for space travel innovation. Elon Musk's privately funded SpaceX built a Starlink satellite constellation, while Spaceflight introduced space cargo ride sharing.

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Now, the wildly popular Ark Invest is adding a space travel ETF to its roster. ARKX will become the company's sixth actively managed innovation ETF and its eighth ETF overall.

ARKX will be Ark Invest's newest ETF

Cathie Wood, Ark Invest's founder and CEO, has a lot of sway over the market. In December 2020, Wood praised CRISPR gene editing stocks, which ultimately led to a serious sector boost. Editas Medicine surged 50 percent immediately after she mentioned the company's potential in a video. 

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In 2020, Wood's own ARK Innovation fund, ARKK, grew way ahead of market rate at 170 percent. Investors trust Wood's intuition, which has helped Ark's full list of ETFs reach $42 billion in assets under management.

On Jan. 13, Ark Invest released a preliminary prospectus filing to share the news about the upcoming ARKX Space Exploration ETF. According to an internal adviser, space exploration refers to "leading, enabling, or benefitting from technologically enabled products and/or services that occur beyond the surface of the Earth."

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Ark says that the industry will be segmented into four components including orbital aerospace, suborbital aerospace, enabling technologies, and aerospace beneficiary.

ARKX stock is still waiting on holdings, but one space travel stock is already thriving

Investors don't know which holdings will make up ARKX yet. However, space travel companies that are already on the market are skyrocketing (perhaps literally and figuratively).

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Virgin Galactic stock ("SPCE" on the NYSE) is on a short-term boost as of Jan. 14. Even after last month's faulty launch, investors are excited about the upcoming ARKX space ETF. They have pumped up Virgin Galactic shares by 11.70 percent in pre-market hours.

The Ark Invest offering isn't the first space travel ETF, but it may become the most popular

The Procure Space ETF (UFO) has seen some ups and downs since its inception in April 2019. The stock fell hard during the market crash that started in February 2020. However, the fund has nearly hit its pre-pandemic high.  

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Based on Ark Invest's popularity, ARKX could be on a different playing field from UFO in no time. UFO's underlying index is the S-Network Space Index.

According to the Ark Invest website, "While most of the names in ARK's portfolio are either not part of broad-based indices or represent very small weights, ARK believes the companies it invests in will be prominent in such indices over a full market cycle." The performance will likely differ between the two space travel ETFs, even if they claim the same industry.

Whatever the case, Wood's influence may be greater than that of a niche index anyway. ARKK has already grown more than 15 percent since the beginning of 2021. The fund's upcoming sibling could see similar compound growth out of the gate.


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