Cramer says there’s no reason Ark’s new space ETF exists

CNBC’s Jim Cramer said on Tuesday 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 the creation of new funds, even if there’s no reason why they exist, ”Cramer said on“ Mad Money ”.

The ARK Space Exploration ETF (ARKX) tracks publicly traded companies in the growing space industry. The fund, which started trading on Tuesday, sipped 1% to $ 20.30 in its first session.

Trimble, the 3D printing ETF and unmanned systems provider Kratos Defense and Security Solutions are the three most weighted stocks in the fund. Defense contractors L3Harris and Lockheed Martin, as well as aircraft manufacturer Boeing, are also in the fund due to their space exposure.

While ARKX includes purely space games, Cramer was puzzled as to why names like Amazon, Alphabet, and Netflix were included in the fund. Chinese e-commerce plays JD.com, Alibaba and Tencent – along with tractor maker Deere – are also among the holdings of ETFs.

“It’s ridiculous, but there aren’t enough real space stocks to make a decent ETF and the manager wants to collect that 0.75% expense ratio,” Cramer said. “Maybe … don’t run a space ETF if you have to complement it with Netflix and Deere.”

Ark Invest did not immediately respond to CNBC’s request for comment.

Ark Invest, which targets disruptive companies especially in the tech arena, has drawn a lot of attention for the strength of its other funds during the Covid-19 pandemic. However, that momentum has waned this year as many investors sold off high-growth stocks from the past year to benefit companies whose businesses are 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: The Cramer charitable trust owns shares of Alphabet, Amazon and Boeing.

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