Dating back to last year, it's hard to find an investor and a fund issuer generating more buzz than Cathie Wood and ARK Investment Management.
The ARK Innovation ETF (NYSEARCA: ARKK) is a big reason for the adulation and attention. After all, it is the largest actively managed exchange traded fund by assets with a stellar track record to boot. While ARKK is legendary, there are other noteworthy products in the ARK stable and that is born out not only by returns, but asset-gathering acumen as well.
Consider this. Prior to March 30, the issuer offered just five ETFs – five active and two passive. Still, it has almost $45 billion in ETF assets under management, good for the tenth-largest tally among all US issuers. That's more than WisdomTree and PIMCO and double the AUM figure for Goldman Sachs ETFs, just to name a few.
In other words, it's a good time for ARK to strike while the iron is hot and that's exactly what the issuer did on Wednesday, March 30, introducing the ARK Space Exploration & Innovation ETF (CBOE:ARKX). ARKX is the issuer's first new ETF in more than two years.
Appetite Appears to Be There
A few years ago, it would have been accurate to say ARK's following was cult-like. Today, that assessment would diminish the firm's accomplishments. Obviously, it takes more than a smattering of devotees to become the tenth-largest ETF issuer.
Along those lines, advisors and clients – and it's likely the former will receive inquiries from the latter about ARKX – it's best not to get wrapped up in the ETF's first day of trading. It did about a $300 million in volume. That's a massive tally for a new ETF, though not tops among this year's rookie funds. How that turnover translates to assets remains to be seen, but at least there's some evidence that market participants are interested in ARK's newest baby.
That's interest is relevant because ARKX isn't the first ETF to address space investing. It's actually the third and the first two aren't exactly the most popular thematic ETFs out there. The Procure Space ETF (NYSEARCA:UFO) has an admirable $130.61 million in assets under management while the SPDR S&P Kensho Final Frontiers ETF (NYSEARCA:ROKT) has just $24 million.
Space investors – a niche currently with a cult-like following – are likely hoping ARKX brings the ARK magic this niche. Perhaps it will.
“The Adviser defines 'Space Exploration' as leading, enabling, or benefitting from technologically enabled products and/or services that occur beyond the surface of the Earth,” according to the issuer.
That broad mandate coupled with active management gives ARKX plenty of latitude and could make the fund as appealing if not more so than legacy funds in the category.
Critics Gonna Critique
ARK and Wood have plenty of fans. There are also plenty of boo birds, too. Much of that stems from her famous call on Tesla (NASDAQ:TSLA) a years back. Oh and by the way, she ended up being right about that.
I bring that up because some are already critiquing ARKX holdings, such as Chinese e-commerce giant JD.com (NADAQ:JD), Netflix (NASDAQ:NFLX) and farm machinery manufacturer Deere (NYSE:DE). JD and Deere are actually “spacier” than many clients are probably thinking.
Some well-known pundits even say ARKX shouldn't exist. That's a harsh criticism, particularly for a fund that's a day old. Advisors don't need to get bogged down with that.
The client message regarding ARKX is likely to be 1) this ETF is a satellite position and 2) It has a drone/unmanned vehicle feel to it. Nothing wrong with either of those traits, particularly when it comes to younger clients seeking disruptive growth allocations.
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