Space Week: This Catalyst Is Fueling Stratospheric Gains
Last week, an investment management firm announced that it’s launching a new exchange-traded fund.
Normally, that’s not really news. New ETFs get launched practically every day.
Except this one’s a little different.
The investment firm kicking things off is ARK Invest; in 2020, they were responsible for five of the top 10 best performing exchange-traded funds on the market. That’s a pretty incredible track record.
ARK is a thematic investor. They invest in big technology trends. For example, they were early to spot the massive trend in electric vehicles and have been one of the biggest institutional cheerleaders of Tesla, a bet that’s proved incredibly right.
As you may have guessed by now, the tech trend they’re grabbing with their new ETF is space exploration!
Space isn’t a new theme for ARK. They’ve been running a Space Exploration strategy for private clients since 2018. But it is the first time that this strategy will be available to public U.S. retail investors.
The new fund will trade under the ticker symbol ARKX.
Vehicles like ARKX could be the catalyst that sends shares of space stocks rocketing higher in the weeks and months ahead. That’s because popular ETFs can be like magnets for capital, driving the values of their underlying holdings higher. That’s also why a handful of space-related stocks surged following the ARK news…
Virgin Galactic (NYSE: SPCE) surged around 20% the day ARK announced their new space ETF…
Other space-related stocks fared similarly.
There’s also speculation that ARK’s cozy relationship with Elon Musk through their long-term bullish take on Tesla Inc. (NASDAQ: TSLA) could be a hint at a position in privately held SpaceX in the fund.
And with new names coming onto the public markets via IPOs and SPACs in 2021, there are likely some big upcoming opportunities in the space industry. (We’ll be talking about them in the days and weeks ahead, of course.)
ARK’s approach is generally to conduct deep research on tech trends and then be vocal about why they’re right. In other words, the introduction of the ARK Space Exploration ETF would bring a bright new spotlight to the opportunities that currently exist in the space field.
Historically, the firm has tracked 30–50 holdings in its existing Space Exploration strategy, which means that the fund will likely launch with positions in a meaningful number of names.
ARK’s track record makes ARKX an interesting ticker symbol to keep on your radar…
Until then, other space-focused ETFs currently trade on the market if you’re looking for instant exposure to the industry. The Procure Space ETF (NASDAQ: UFO) and the SPDR Kensho Final Frontiers ETF (NYSE: ROKT) are a couple of notable options in the meantime.
Jonas Elmerraji, CMT