Last year was an interesting one when it comes to space investing. On a down note, total investments in space-related projects and technology declined by $45 billion from 2021, but the 2022 total of $424 billion is still impressive.
On the other hand, a record number of rockets were launched last year. Combine that with the aforementioned investment tally, and it’s easy to see why some investors remain enthusiastic about the space segment. That could be a long-term positive for exchange traded funds such as the ARK Space Exploration & Innovation ETF (ARKX).
ARKX is actively managed, and that’s important because investors new to the space theme are apt to assume that exposure to this still-nascent industry requires allocations to smaller, speculative companies. That’s not the case, as ARKX indicates. At the end of last year, the weighted average market capitalization of the fund’s components was $61 billion, according to issuer data. The involvement of financially credible companies is integral to the industry’s growth and when it comes to attracting a broader swath of investors.
“The space economy’s continued growth hinges on space companies proving their worth to non-space entities, and moving beyond established industry partnerships and government contract money,” reported Miriam Kramer for Axios.
Another benefit of ARKX’s status as an actively managed ETF is its ability to hold stakes that some investors may not readily associate with space investing. Those include ARK’s own 3D Printing ETF (PRNT) and Deere (NYSE: DE), which combine for 9.13% of the fund’s roster.
“Investors and companies outside of the space industry are looking to space to add value to their own companies,” according to Axios. “They’re building and using analytics products that integrate Earth observation data and using space for communications tools like tracking ships at sea.”
In other words, it’s not surprising that when accounting for Deere’s increasing digitalization, the agriculture equipment giant is a top-10 holding in ARKX.
“Agricultural companies have adopted technologies such as drones, machine learning, artificial intelligence, and automation to help farmers save time, money, and labor. Soon, satellites can be added to the list as well. John Deere, which has previously introduced technologies such as unmanned tractors, crop-spraying drones, and weed detection sprayers,” according to a February Deere News post.
ARKX’s exposure to well-known, blue chip-type companies doesn’t end there, as Amazon (NASDAQ: AMZN), Alphabet (NASDAQ: GOOG), and Lockheed Martin (NASDAQ: LMT) are also members of the ETF’s portfolio.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.