Cathie Wood widens the line with the ARK Space Exploration ETF

This milestone would set the stage for a rare venture: the fastest ETF to reach $ 1 billion was State Street‘s

SPDR Gold Trust Fund, which achieved the mark in just three days in 2004.

“This now speaks to the general power of ARK,” said Nate Geraci, president of ETF Store, an investment advisory firm. “Right now, investors think everything that touches Cathie Wood turns to gold.”

The fund is ARK Investment Management LLC’s first launch in two years and contrasts with the lukewarm recipes its previous products received. ARK’s flagship innovation fund, launched in 2014, took more than 3 and a half years to reach $ 1 billion. Its latest launch, the fintech innovation ETF in 2019, took about 21 months.

Still, ARK has changed a lot. Within a year, Ms. Wood’s ARK has transformed from a small emerging manager of a handful of ETFs to one of the largest fund managers in the U.S. The stock prices of the firm’s other five actively managed ETFs doubled or tripled last year on the back of growing stocks like Tesla Inc.

and Roku Inc., earning Mrs. Wood a cult following from individual investors who post all her tweets and videos.

But these growth stocks are now the epicenter of a sale that has left ARK’s oldest funds down at least 14% from their highs earlier this year. Instead of deploying another technology-linked primary fund, ARK has tilted nearly half of its space ETF toward manufacturers such as Lockheed Martin Corp.

, Boeing Co.

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

The fund is different enough for investors who say they are fans of Mrs Wood, but are also wary of devoting more money to a faltering technology trade.

“Most of Cathie’s ETFs are very tech-savvy,” said Tré Diemer, a 20-year-old student at William & Mary, who said he bought a couple of thousand dollars of ARKX shares Monday. “Look at this ETF and you see a lot of names with which it hasn’t been so involved.”

He already owns several growth stocks and has been looking at Ms. Wood’s other funds as a home to earn some of the money she earns by working as an emergency medical technician and making deliveries for DoorDash. Inc.

But Ms. Wood’s technology and other funds seemed overvalued, a point bolstered by the recent losses she said she suffered.

“You can almost see it as a reopening ETF,” Diemer said, referring to the underlying stocks about to benefit from a booming economy.

Not everyone is a fan of background makeup. Some went to social media, creating memes to circumvent ARK’s decision to include Deere and other companies that appear to have no significant ties to the fund’s theme of investing in space exploration and innovation. One showed a Deere tractor traversing a landscape of Mars, another to the moon.

Deere, meanwhile, responded with several memes of its own, including one showing a UFO surrounding a tractor. Some analysts said Deere’s inclusion is less intense when it comes to the company manufacturing satellite-guided machinery.

Other actions included in the fund that appear to be at odds with its mandate include ARK’s passively managed 3D printing ETF and Netflix shares. Inc.

and Amazon.com Inc.

Meanwhile, some of the few pure space stocks, such as satellite and imaging company Maxar Technologies Inc.

he did not make the cut. Ni Rocket Lab USA Inc. nor Astra Space Inc., two rocket manufacturers that merge with blank check companies to go public.

Ren Legu, ARK’s client portfolio manager, acknowledged that the holdings are causing some confusion, but said they all agreed with the fund’s mandate. “When we talk about space exploration and innovation, we define it as everything on the ground,” Legu said.

The advancement of drone technology plays an important role in the fact that several companies, including Amazon, are involved in the fund, Mr. Read. Netflix would benefit from the launch of satellites that would allow greater adoption of broadband Internet for transmission and some parts of the rockets would be printed in 3D, he added. As for the space companies left out, Mr. Legu said some valuations were too rich, especially those related to special-purpose acquisition companies, while others did not pass their initial assessment of whether the shares could maintain an annualized rate of return of 15 %.

“We continue to track many companies in case we get a market environment where there is a wider sale and we can get an attractive price,” Mr. Read.

Some investors are not convinced.

“I didn’t like his stakes too much,” said Carter Wang, who is 19 and has about $ 3,000 in four of ARK’s previous funds. She is a fan of Mrs. Wood, who cites her aggressive calls to Tesla as a key reason for her decision to invest in various funds of the firm. But Mr. Wang, a business management economics specialist at the University of California, Santa Cruz, said the inclusion of ARK’s 3D printing ETFs was strange, leading him to transfer the fund.

For several ARK investors, Ms. Wood’s past performance is key. With ARKX shares trading at around $ 21, some investors said they saw an opportunity for the firm’s next success, compared to ARK’s innovation fund, the price of which shares is six times higher since it was launched in 2014 and continues to attract the attention of investors. (The ETF recorded record daily inflows one day last week, reaching more than $ 700 million).

“It doesn’t really bother me,” said James Carter, a 31-year-old tech writer in Washington, DC, who acquired shares on the first day of space fund trading. He said he had intended to invest in the fund since he learned of it earlier this year, even before any of his underlying shares had been announced. The possibility is proposed that the fund include shares of Elon Musk’s private rocket company, Space Exploration Technologies Corp.

“I arrived late” with the other funds, Carter said of his other ARK investments. “Therefore, I have set aside money specifically for the new ARK fund just for my interest in ARK. I wanted to get in early. “

Write to Michael Wursthorn to [email protected]