🛸The Space Race in Your Portfolio: ARKX Explained

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Welcome to this week's new articles about ETF UNO. The cosmos has always fascinated humanity, from ancient stargazers to modern entrepreneurs like Elon Musk and Jeff Bezos. Today, we will explore the investment vehicle that allows you to bring the excitement and potential of space exploration directly into your portfolio: the ARK Space Exploration & Innovation ETF (ARKX).

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What is ARKX?

When people think of space investing, they often envision rockets, satellites, or astronaut equipment. While these elements are crucial, the space economy includes much more than initially apparent.

The ARKX ETF, managed by Cathie Wood's ARK Investment, takes a broader view of space-related investments, focusing on companies that lead, enable, or benefit from technologically advanced products and services that occur beyond Earth's surface.

This expansive definition includes:

• 🚗 Autonomous Mobility

• 🤖 Intelligent Devices

• 🔋 Advanced Battery Technologies

• 🖨️ 3D Printing

• 🚀 Reusable Rockets

• 🦾 Adaptive Robotics

• 🧠 Neural Networks

The beauty of ARKX lies in its ability to capture both pure-play space companies and businesses that benefit from space-related innovations. This approach exposes investors to the space economy while maintaining a level of diversification that pure rocket company investments wouldn't offer.

Investment Strategy📊

ARKX functions as a thematic ETF, which means it's designed to capitalise on a specific investment theme - in this case, space exploration and innovation. When considering how to implement ARKX in your portfolio, there are several strategic approaches to consider:

• 🛰️Core-Satellite Approach: One effective method is to use ARKX as a satellite position within a core-satellite portfolio structure:

  • Maintaining a core portfolio of broad-market ETFs (70-80% of total holdings).

  • Adding ARKX as one of the satellite position (5-15% of holdings).

  • Rebalancing periodically to maintain desired allocations.

• 📈Growth Component: ARKX can serve as the growth component of a diversified portfolio, particularly for investors with a long-term investment horizon who can tolerate higher volatility with exposure to emerging technologies and innovations.

• 🧩Sector Diversification: The ETF can provide unique sector exposure that might be underrepresented in traditional portfolios, particularly in aerospace, technology, and industrial sectors.

ARKX at a glance

ETF Issuer: ARK Invest

Inception: 2021-03-30

Asset Class: Equity

Underlying Index: it is an actively manged ETF

Geographical Focus: Global

Expense Ratio: 0.75% (as of last data point)

Dividend Yield: 0% (as of last data point)

Distribution Frequency: N/A

Historical Performance

Since its launch in March 2021, ARKX has experienced both the excitement and challenges that come with thematic investing:

• Initial strong interest from investors in the launch period and Benefited from the broader enthusiasm for growth and innovation stocks.

• Experienced challenges during the tech sector correction and showed correlation with broader innovation-themed investments.

• Adaptation to changing market conditions with a focus on companies with strong fundamentals and increased emphasis on profitable companies within the space ecosystem in recent periods

ETF Radar View

The radar chart below shows the general characteristics of the ETF:

Top 3 Reasons to Invest

1. Exposure to a Growing Industry: According to various industry estimates, the space economy is projected to reach $1 trillion by 2040. ARKX provides investors with broad exposure to this growth potential through a diversified portfolio of companies involved in various space exploration and innovation aspects.

2. Professional Management with a Track Record: ARK Investment Management, led by Catherine Wood, has demonstrated expertise in identifying and investing in innovative companies. Their active management approach allows quick adjustments to capture emerging opportunities and manage risks in this rapidly evolving sector.

3. Diversification Beyond Traditional Space Companies: ARKX's investment strategy extends beyond traditional aerospace companies. This diversification helps manage risk while maintaining exposure to space-related growth.

Top 3 Reasons Not to Invest

1. Higher Volatility: Like many thematic ETFs, ARKX can experience significant price swings due to market sentiment changes, individual company performance, or regulatory developments.

2. Concentration Risk: While diversified within its theme, ARKX remains concentrated in space-related companies and technologies.

3. Emerging Industry Challenges: The space industry faces several obstacles, such as high development costs and Long timelines for project completion. These factors can impact the performance of companies within the ETF.

🌠Where Space Technology Meets Smart Investing

The ARK Space Exploration & Innovation ETF provides a unique opportunity to invest in the future of space exploration and related technologies. Although it involves certain risks and considerations, ARKX offers investors a professionally managed and diversified way to tap into the potential of the expanding space economy. As such, ARKX can be a valuable addition to a well-diversified investment portfolio.

We are excited to keep exploring innovative investment opportunities like ARKX with our growing community of ETF investors. If you enjoyed this analysis, consider joining ETF UNO, where we are dedicated to helping you navigate the expanding universe of ETF opportunities. Stay tuned for more analysis, and feel free to share your thoughts and questions with our community!

DISCLAIMER: This article is for informational purposes only and should not be considered as investment advice. Always conduct your own research and consult with a financial advisor before making investment decisions.