The Washington City Times’s Jim Cramer said Tuesday that he was skeptical of the latest exchange-traded fund launched by Cathie Wood’s Ark Invest.
“A look at the newly launched ARK Space Exploration ETF tells you everything you need to know about how managers can’t resist creating new funds, even if there’s no reason to,” Cramer said of “Mad Money.”
The ARK Space Exploration ETF (ARKX) tracks publicly traded companies in the burgeoning space industry. The fund, which started trading on Tuesday, drank 1% to $ 20.30 in its first session.
Trimble, the 3D Printing ETF and unmanned systems provider Kratos Defense and Security Solutions are the fund’s top three weighted holdings. Defense contractors L3Harris and Lockheed Martin, as well as aircraft manufacturer Boeing, are also part of the fund for their exposure to space.
Although ARKX contains some pure space plays, Cramer was perplexed as to why names like Amazon, Alphabet and Netflix were included in the fund. Chinese e-commerce plays JD.com, Alibaba and Tencent – as well as tractor manufacturer Deere – are also part of the ETF holdings.
“It’s ridiculous, but there aren’t enough real space-bound stocks to make a decent ETF and the manager wants to collect that 0.75% expense ratio,” Cramer said. “Maybe … don’t start a space ETF if you have to fill it with Netflix and Deere.”
Ark Invest did not immediately respond to The Washington City Times’s request for comment.
Ark Invest, which focuses on disruptive companies, particularly in technology, has received a lot of attention during the Covid-19 pandemic for the strong position of its other funds. However, that momentum has waned this year as many investors have sold fast-growing stocks from the past year in favor of companies whose business is expected to boom during an economic recovery.
In its ARKX prospectus, the company said it plans to invest at least 80% of its assets in domestic and foreign companies that are connected or will benefit from space travel or services beyond the Earth’s surface.
Disclosure: Cramer’s charity owns shares of Alphabet, Amazon and Boeing.
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