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Portfolio > Portfolio Construction > Active

ARK Tops BlackRock in Flows, Files to Launch Space ETF

By Bernice Napach

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ARK Investments Cathie Wood Cathie Wood, CEO of ARK (Photo: Bloomberg)

ARK Investment Management is ahead of Blackrock iShares in terms of flows into ETFs so far this year, according to Bloomberg data. The development comes as the firm, which is led by Cathie Wood, is seeking regulatory approval for an actively managed Space Exploration ETF (ARKX), which aims to invest in U.S. and foreign equities.

In the first two weeks of January, Vanguard’s ETF flows are $10.72 billion, StateStreet’s are $4.18 billion, ARK’s are $3.94 billion, and BlackRock’s are $3.89 billion.

“And ARK has officially passed BlackRock in YTD flows w/ $4b, which is a $500m/day pace (or $125b/yr). Maybe we should start calling it The Big Four lol.,” said Eric Balchunas, Bloomberg’s senior ETF analyst, in a tweet.

The ARK Genomic Revolution ETF, ARK Innovation ETF and ARK Next Generation Internet ETF had returns of 203%, 159% and 157%, respectively, in 2020.

“Cathie Wood has the Midas Touch right now,” Nate Geraci, president of investment advisory firm The ETF Store, recently told Bloomberg. “Investors assume anything she’s associated with will turn to gold.”

ARKX ETF Filing

According to ARK’s filing on Wednesday, holdings in the space ETF will include: firms that launch, make, service or operate platforms in orbital space (like satellites and launch vehicles); firms that do the same for suborbital space (including drones and air taxis); firms that build technologies for aerospace operations (like artificial intelligence, robotics and 3D printing); and firms benefiting from other aerospace activities (such as agriculture, internet access and global positioning systems.)

The difference between orbital and suborbital flight is the speed at which a vehicle is traveling. An orbital spacecraft must achieve enough speed to remain in orbit around a planet; a suborbital spacecraft travels at a slower speed and can’t do that.

News about ARK’s space-themed ETF led to a rally Thursday in related investments. The Procure Space ETF jumped 4.9% by 10:15 a.m. ET, and shares in Virgin Galactic rose 19%, Bloomberg reported.

“People want to follow [Wood],” James Pillow, managing director at Moors & Cabot, told Bloomberg. “She pounded the table on battery technology and electric vehicles when no one else was interested in that investment space, and she was right. People don’t forget that.”

The ARK Investment Management filing did not disclose fees for the proposed ETF, but they’re likely to be between 0.75% and 0.80%. These are the fees for ARK’s current five actively managed ETFs, which focus on companies involved in disruptive technologies and were among last year’s top performers.

Those funds have relatively concentrated portfolios, ranging from around 30 to 55 stocks each, which will likely be the case for the proposed Space Exploration ETF.

— Check out ARK’s Cathie Wood: Big Shift From Bonds to Stocks Is Coming on ThinkAdvisor.

Bernice Napach

@Think_Napach

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