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Cathie Wood expands hot streaks with ARK Space Exploration ETF

Cathie Wood’s new ARK space exploration and innovation ETF ARKX -1.00%

Although it has been criticized that it may not necessarily reflect the emerging space exploration market, it has the potential to become one of the most successful fund offerings in history.

According to data from FactSet as of Tuesday, investors injected $536.2 million into the actively managed exchange traded fund ARKX in the first five days of trading. Analysts said that this exceeded the industry’s average of $100 million raised in three years and allowed the fund to reach $1 billion in assets within a few days.

Such a milestone will make this fund a rare company: The fastest ETF to reach $1 billion is State Streetof

SPDR Gold Trust GLD -0.03%

The fund reached its goal in just three days in 2004.

Nate Geraci, president of ETF Store, an investment consulting firm, said: “This illustrates the overall strength of Ark Airlines.”

; “At this point, investors think that anything Cathie Wood encounters has become gold.”

This fund is the first launch of Ark Investment Management Co., Ltd. in two years, which is in stark contrast to the lukewarm reception of early products. ARK’s flagship innovation fund started in 2014 and it took more than 3.5 years to reach $1 billion. Its last release was the 2019 Fintech Innovation ETF, which took about 21 months.

However, ARK has undergone a lot of changes. In a year’s time, Ms. Wood’s ARK has transformed from a small upstart manager of a few ETFs to one of the largest fund managers in the United States. The stock prices of the company’s other five actively managed ETFs doubled or tripled last year.Benefited from the rise of growth stocks such as Tesla the company

And Roku Inc., in every tweet and video of Ms. Wood, attracted the pursuit of Ms. Wood’s individual investors.

However, these growth stocks are now at the center of the sell-off, which has caused Ark Airlines’ earlier funds to fall at least 14% from their highs at the beginning of the year. ARK did not launch another major fund related to technology transactions, but instead tilted nearly half of its space ETFs to manufacturers including Lockheed Martin. the company

, Boeing the company

And Deere DE -0.03%

& Co. is a sector of the stock market that has benefited from rising interest rates and inflation expectations in recent months.

For investors who say they are fans of Ms. Wood but are wary of investing more money in the faltering technology industry, the appeal of the fund is unique.

“Most of Cathie’s ETFs are technology-intensive,” said 20-year-old Tré Diemer, a student of William & Mary, who said he bought several thousand dollars in ARKX stock on Monday. “You look at this ETF and you see many names that she has not participated in.”

He already owns a variety of growth stocks and has always regarded Ms. Wood’s other funds as a house where he earned part of his income from emergency medical technicians and products delivered for DoorDash. the company

But technology companies and Ms. Wood’s other funds seem to be overvalued, and this is reinforced by his recent losses that he said he has suffered.

Mr. Diemer said: “You can almost think of it as a reopened ETF,” referring to the underlying stocks that could potentially benefit from the economic rebound.

Not everyone likes the composition of the fund. Some people enter social media and create memes to mimic ARK’s decision to join Deere and other companies that seem to have nothing to do with the fund’s investment in space exploration and innovation. One shows a Deere tractor hovering over the Martian landscape, and the other shows it on the moon.

In the case of Diere, it responded to several of its own memes, including one showing UFOs coming towards a tractor. Some analysts said that considering Deere’s production of satellite-guided machinery and equipment, it has not been long before Deere was included.

Other stocks included in the fund appear to run counter to its mandate, including ARK’s passively managed 3D printing ETF and Netflix stocks. the company

And Amazon.com the company

At the same time, some of the few pure space stocks, such as satellite and imaging company Maxar Technologies the company

No promotion. Neither Rocket Lab USA Inc. nor Astra Space Inc., the two rocket manufacturers that are merging with a bad check company, are listed.

Ren Leggi, ARK’s client portfolio manager, acknowledged that these assets have caused some confusion, but said they are fully in line with the fund’s responsibilities. Leggie said: “When we talk about space exploration and innovation, we define it as everything on the ground.”

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What explains the success of Cathie Wood’s latest exchange traded fund? Join the conversation below.

Mr. Leggi said that advances in drone technology play an important role in why several companies, including Amazon, are involved. He added that Netflix will benefit from the deployment of satellites, which will enable broadband Internet to be further used for streaming media, and certain rocket parts will be 3D printed. Regarding the missing aerospace companies, Leggie said that some of them are overvalued, especially those related to special-purpose acquisition companies, while other companies have not passed a preliminary assessment and believe that the company’s stock can maintain 15%. The annualized rate of return.

Leggie said: “In case we encounter a market environment with a wider sell-off, and we can enter the market at an attractive price, we will still continue to follow many companies.”

Some investors still don’t believe it.

“I don’t like its assets very much,” said Carter Wang, now 19, who has about $3,000 in ARK’s four early funds. He is a fan of Ms. Wood, saying that her aggressive appeal to Tesla was the key reason for his decision to invest in several funds of the company. However, Mr. Wang, who majored in business management economics at the University of California, Santa Cruz, said it was strange to include ARK’s 3D printing ETF, which made him pass on the fund.

For several Ark Airlines investors, Ms. Wood’s past performance is crucial. With ARKX’s stock price hovering around $21, some investors said they see the next opportunity for success in the company, such as comparing it to ARK’s innovation fund. The fund’s share price has risen six times since its launch in 2014 and continues to attract investors’ attention. (The ETF had a record daily inflow of funds in one day last week, attracting more than $700 million.)

James Carter, a 31-year-old technology writer in Washington, D.C., said: “This doesn’t really bother me.” He snapped up stocks on the first day of the space fund’s listing. He said that since he first heard about the fund earlier this year, he decided to invest in the fund, even before announcing any related stocks. He insisted that the fund could eventually include shares in Elon Musk’s private rocket company Space Exploration Technologies Corp..

Mr. Carter said of his other investments in ARK: “I’m a bit late.” “Therefore, out of my interest in ARK, I set aside funds specifically for the new ARK fund. I want to go early.”

Investment knowledge you need to know

Write to Michael Wursthorn (Michael Wursthorn) at Michael.Wursthorn@wsj.com

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