The long-awaited ARK Space Exploration And Innovation ETF (BATS:ARKX) has finally released its holdings this week and has begun to trade. ARK Invest defines space exploration as "leading, enabling, or benefiting from technologically enabled products and/or services that occur beyond the surface of the Earth." However, the holdings have certainly created a buzz of confusion and disappointment. Investors should certainly temper their expectations as ARKX is chartered to target companies that focus on aerospace, satellites, and defense, which are more widely available than "pure-play" space exploration companies that you may see in movies.
Source: ARK Invest accessed 3/31/21
The holdings seem to recycle much of ARK Invest's existing holdings in its other ETFs, especially from the ARK Autonomous Technology & Robotics ETF (BATS:ARKQ). The cherry on top is that the second largest holding is one of its non-active ETFs, the ARK 3D Printing ETF (PRNT). Some other holdings are also a bit unexpected, such as Amazon (AMZN), Google (GOOG) (GOOGL), and Netflix (NFLX), which have only tangential association with space exploration. Amazon AWS has established some aerospace cloud solutions. Google has partnered with NASA on several projects. Netflix... has movies about space? However, these business ventures are fairly miniscule and nowhere close to the companies' main revenue-generation business lines.
In my blogpost, Get In The ARK Space Exploration ETF Early With ARKQ, I predicted back in January that this would most likely be the case for ARKX. There are not enough "pure-play" space exploration companies such as Virgin Galactic Holdings (SPCE) available on the public markets and thus ARK Invest will have to recycle significant holdings from its other ETFs, primarily ARKQ. ARK Invest has a history of recycling holdings, as I analyze in an article, It Doesn't Really Matter Which ARK ETF You Buy.
One of the main reasons behind ARK Invest's decision to recycle ARKQ holdings heavily is that space exploration will eventually require significant manufacturing innovations as well as build on top of existing infrastructure with satellite and aerospace technology. This is why ARKX contains many defense companies that specialize in satellite technology and aerospace manufacturing and their primary customers are governments. Additionally, 3D printing technologies will help improve and streamline manufacturing capabilities to generate the vehicles required for space exploration.
There are some rumors that these initial holdings are just placeholders as ARK Invest markets ARKX and will swap out holdings substantially later on. Until these rumors are verified, it is safe to assume these current holdings will be fairly accurate for awhile.
Holdings Overlap Of ARKX
Utilizing the latest holdings data for ARK ETFs, below is a table of the weight of ARKX holdings that is found in other ARK ETFs.
| ARK ETF | Overlap With ARKX |
| ARKK | 10% |
| ARKQ | 58% |
| ARKW | 11% |
| ARKG | 0% |
| ARKF | 17% |
| Any | 66% |
Source: Author's own calculations. Holdings data from ark-invest.com active ETFs accessed 3/31/21.
Unsurprisingly, a very high percentage of the weight of ARKX is found in other ETFs at 66%, with the highest being from ARKQ at 58%. ARKQ similarly contains a 54% of its weight in ARKX. The holdings not from ARKQ are typically found in the ARK Next Generation Internet ETF (ARKW) (ex: NFLX) and the ARK Fintech Innovation ETF (ARKF) (ex: AMZN).
Let's take a look at the holdings that are unique to ARKX. This represents about a third of ARKX's holdings, but if you subtract PRNT as it is technically another ARK ETF, there's only about 27% of ARKX's weight in new holdings.
| Company | Focus | Ticker | Weight |
| THE 3D PRINTING ETF | 3D Printing Companies | PRNT | 6% |
| L3HARRIS TECHNOLOGIES INC | Defense Contractor | LHX | 4.99% |
| KOMATSU LTD | Manufacturing | OTCPK:KMTUF | 4.63% |
| THALES SA | Electrical Systems and Defense | OTCPK:THLEF | 3.97% |
| BOEING CO/THE | Aerospace Manufacturing | BA | 3.57% |
| SPIRIT AEROSYSTEMS HOLD-CL A | Boeing Aircraft Part Manufacturing | SPR | 3.28% |
| GARMIN LTD | GPS Manufacturing | GRMN | 2.02% |
| AIRBUS SE | Aerospace Manufacturing | OTCPK:EADSF | 1.61% |
| HEICO CORP | Aerospace and Defense | HEI | 1.12% |
| HONEYWELL INTERNATIONAL INC | Aerospace Manufacturing | HON | 1.11% |
| REINVENT TECHNOLOGY-CLASS A | SPAC | RTP | 0.72% |
| Total | 33.02% |
Source: Author's own calculations. Holdings data from ark-invest.com active ETFs accessed 3/31/21.
Conclusion
Picking up ARKX doesn't make sense to me just to grab a few more companies that are actually mostly focused on technologies impacting earth in the near future. If you're already invested in ARKQ, you would already have the majority of ARKX. Including ARKW, ARKF, and PRNT would get you nearly 3/4ths of the way.
If the rumors are true that the current holdings are just placeholders, I would be interested in re-evaluating the holdings overlap in the future. However, at the moment, investing in ARKX would just give you more concentration into the aerospace manufacturing and defense industries. While this is a legitimate industry to invest in for the potential of future integration with space exploration, it does not generate much if any revenue currently.
