ETFs Are Headed Into Space

Richard Branson owes somebody a few beers.

On Thursday morning, stock prices for Branson’s space business, Virgin Galactic Holdings, shot up 18%. His own stake increased by an estimated $300 million.

But the rise had little to do with Virgin Galactic or Branson. The company was riding the profitable coattails of a new thematic ETF.

The Space Exchange

On Wednesday, investor — and Bloomberg’s best stock picker of 2020 — Cathie Wood filed SEC paperwork to create The Ark Space Exploration ETF. The fund will invest in stocks related to space exploration.

It is not clear which companies Wood will invest in, but, like Virgin Galactic, Maxar Technologies’ stock increased 20%.

• There are only a handful of publicly-traded space companies, but investor interest in space soared in 2020. SPACs have eyed the industry, meaning more space companies could go public in the near future.

The Thematic ETF Boom

Wood’s ARKInvest has six other ETFs, including the largest actively-managed ETF, the Ark Innovation ETF. Its assets increased 170% in 2020, to $17 billion.

Thematic ETFs and related investment vehicles were wildly successful in 2020.

• Assets for Grayscale’s Bitcoin Trust — a quasi-ETF that is a proxy for bitcoin investment — climbed from $2 billion to $20 billion.
• Assets under Roundhill Investments’ management exceeded $250 million last year. Its publicly-traded shares and asset values for its sports gambling and eSports ETFs increased by over 50%.

The Takeaway: All of Wood’s ETFs focus on emerging technologies. She has told CNBC that investors “get on the right side of change.”