Cathie Wood’s new ARK Space Exploration & Innovation ETF is already on track to be one of the most successful fund launches ever, despite criticism that it does not necessarily reflect the burgeoning market for space exploration.
Investors poured $ 536.2 million into the actively managed listed fund, known as ARKX, in the first five trading days, according to FactSet data for Tuesday. It surpasses the industry average of three years to raise $ 100 million and sets the fund on track to reach $ 1 billion in assets within days, analysts said.
Such a milestone would place the fund in a rare business: The fastest ETF to reach 1 billion. $ Var State Street‘s
SPDR Gold Trust fund that hit the mark in just three days back in 2004.
“It speaks to ARK̵
The fund is ARK Investment Management LLC’s first launch in two years and stands in contrast to the lukewarm receptions that the previous products received. ARK’s flagship innovation fund, which started in 2014, took more than 3 1/2 years to reach 1 billion. $. The last launch, the fintech innovation ETF in 2019, took about 21 months.
Much has changed for ARK. Over the course of a year, Ms. Woods ARK has transformed from a small, upstart manager of a handful of ETFs into one of the largest fund managers in the United States. The stock prices of the firm’s five other actively managed ETFs doubled or tripled last year on the back of rising growth stocks like Tesla Inc.
and Roku Inc., which earns Ms. Wood a cult feel of individual investors hanging on to her every tweet and video.
But these growth stocks are now the epicenter of a sale that has left ARK’s older funds at least 14% off their highs earlier this year. Instead of rolling out another fund primarily linked to tech trading, ARK has tilted nearly half of its space ETF toward manufacturers, including Lockheed Martin Corp.
, Boeing Co.
and Deere & Co., a stock sector that has benefited from rising interest rates and inflation expectations in recent months.
The fund is different enough for investors who say they are fans of Ms. Wood, but also wary of plowing more money into a faltering tech trade.
“Most of Cathie’s ETFs are technologically heavy,” said Tré Diemer, a 20-year-old student at William & Mary, who said he bought a few thousand dollars of ARKX shares on Monday. “You look at this ETF and see a lot of names she hasn’t been that involved in.”
He already owns a number of growth stocks and has been aware of Mrs Woods other funds as a home for some of the money he earns by working as an emergency medical technician and running supplies for DoorDash Inc.
But tech and Mrs. Woods’ other funds seemed overrated, a point reinforced by the recent losses he said he maintained.
“You can look at this almost as a reopening of the ETF,” Mr Diemer said, referring to underlying stocks that were poised to benefit most from a rising economy.
Not everyone is a fan of the foundation’s makeup. Some took to social media and created memes to spot ARK’s decision to include Deere and other companies that appear to have no significant connection to the fund’s theme of investing in space research and innovation. One showed a Deere tractor driving across a Martian landscape, another on the moon.
Deere, for his part, responded with several of his own memes, including one showing a UFO beaming up a tractor. Some analysts said the acquisition of Deere is less stretchy when considering that the company manufactures satellite-controlled machines.
Other shares included in the fund that appear to conflict with its mandate include ARK’s passively managed 3D printing ETF and shares in Netflix Inc.
and Amazon.com Inc.
Meanwhile, some of the few pure-play space inventories such as the satellite and image processing company Maxar Technologies Inc.
did not cut. Neither Rocket Lab USA Inc. or Astra Space Inc., two rocket makers that are merging with blank check companies to go public.
Ren Leggi, a client portfolio manager at ARK, acknowledged that the stocks are causing some confusion, but said they are all in line with the fund’s mandate. “When we talk about space exploration and innovation, we define it as everything above ground,” said Mr. Leggi.
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Advances in drone technology play a big role in why more companies, including Amazon, are in the fund, said Mr. Leggi. Netflix will benefit from the rollout of satellites that allow further adoption of broadband internet for streaming, and some rocket parts are 3D-printed, he added. As for the omitted space companies, Mr. Add that the valuation of some was too rich, especially those involved in special purpose corporations, while others did not pass their initial assessment of whether the stock could sustain a 15% annual return.
“We will continue to track many companies if we get a market environment where there is a wider sales and we can come in at an attractive price,” said Mr. Leggi.
Some investors do not remain convinced.
“I was not so happy with its holdings,” said Carter Wang, 19, who has about $ 3,000 in four of ARK’s former funds. He is a fan of Mrs Wood and refers to her aggressive appeal to Tesla as a major reason for his decision to invest in several of the company’s funds. But Mr. Wang, an economics business executive at the University of California, Santa Cruz, called the involvement of ARK’s 3D printing ETF unequal, prompting him to pass on the fund.
For several ARK investors, Ms. Woods past performance is key. With shares in ARKX trading around $ 21, some investors said they see a chance to get into the company’s next success, comparing it to ARK’s innovation fund, whose share price is six times higher since its launch in 2014 and continues to command investors’ attention. (ETF saw record daily inflows one day last week, drawing more than $ 700 million.)
“It’s not really bothering me,” said James Carter, a 31-year-old tech writer in Washington, DC, who snapped up stocks on the space fund’s first trading day. He said his mind was set on investing in the fund when he first heard about it earlier in the year, even before any of its underlying stocks had been announced. He is holding out for the possibility that the fund will end up including shares in Elon Musk’s privately owned rocket company, Space Exploration Technologies Corp.
“I was a little late” with the other funds, Carter said of his other ARK investments. “So I specifically set aside money for the new ARK fund just because of my interest in ARK. I wanted to get in early. ”
Write to Michael Wursthorn at Michael.Wursthorn@wsj.com
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