New space ETF on the horizon lifts shares in Virgin Galactic, Maxar and SRAC
Investors in the space race will have a new ETF to choose from soon, as ARK Investment Management has filed to launch a new fund tracking space exploration companies.
Called the ARK Space Exploration ETF, the management company did not say which companies it will be investing in nor that it will track a particular index, unlike the Procure Space ETF (NASDAQ:UFO), which tracks the S-Network Space Index.
It will be an actively-managed exchange-traded fund, which sounds a misnomer but is fairly common, with a manager or team making decisions on the underlying portfolio allocation.
ARK, as 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,” it said in the document.
It believes there are four overarching categories of space exploration: orbital aerospace companies, which launch, make, service, or operate platforms in the orbital space, including satellites and launch vehicles; suborbital aerospace companies that launch, make, service, or operate platforms in the suborbital space, including drones, air taxis and electric aviation vehicles; enabling technologies, where companies create the technologies required for successful value-add aerospace operations, including artificial intelligence, robotics, 3D printing, materials and energy storage; and aerospace beneficiary companies, which stand to benefit from aerospace activities, including agriculture, internet access, global positioning system (GPS), construction and imaging.
“Space exploration is possible due to the convergence of a number of themes, and a space exploration company may not currently derive any revenue, and there is no assurance that such company will derive any revenue from innovative technologies in the future,” ARK said.
It said it will select investments for the fund that represent its “highest-conviction investment ideas within the theme of space exploration”, ranging from micro-cap to blue chip companies, including in foreign equity securities in both developed and emerging markets, it said.
The ETF’s portfolio is expected to contain 40 to 55 stocks.
Shares in Virgin Galactic Holdings Inc (NYSE:SPCE) were up 15% in pre-market trading, with investors anticipating it will be one of the stocks in the portfolio, while only some other pure-play space companies were lifted.
Maxar Technologies Inc (NYSE:MAXR), the geospatial satellite specialist, was up over 14%, but fellow satellite groups Loral Space & Communications Inc (NASDAQ:LORL) and Trimble Inc (NASDAQ:TRMB), a developer of software and hardware for navigation and geospatial satellites, were unmoved.
But shares in Stable Road Acquisition Corp (NASDAQ:SRAC), a shell company created to float the ‘space tug’ company Momentus, rocketed 29%, and New Providence Acquisition Corp (NASDAQ:NPA), which has bought space broadband company AST & Science, was up 16%.