ARK Space Exploration & Innovation ETF (ARKX)

Active-managed concentrated space ETF — Cathie Wood's team picks 33 names with a heavy defense crossover tilt. Higher single-name idio risk than UFO, but materially purer exposure to the names that actually move.

Investment Research · Photoncap-style deep dive · Bucket E v1 · 2026-05-22

What this ETF tracks

ARKX is actively managed — there is no index. Ark Invest's research team selects 30-40 companies they classify into four buckets: orbital aerospace (launchers, satellites), suborbital aerospace (drones, eVTOL), enabling technologies (3D printing, AI, robotics), and aerospace beneficiaries (consumer of space services). The fund rebalances daily — positions can shift materially week-to-week based on Ark's conviction. That's the key structural distinction from UFO: UFO is rule-bound, ARKX is judgment-bound.

The current portfolio reads as a "defense-tech crossover" fund more than a pure space fund. Top holding L3Harris (LHX) at 9.62% is a defense prime with space and electronic warfare exposure. Kratos (KTOS) at 7.77% builds unmanned systems and defense space subsystems. Teradyne (TER) at 6.68% makes semiconductor test equipment that is only space-adjacent. Deere (DE) at 6.39% is in the fund because Ark believes precision-ag uses satellite imagery — a loose interpretation. So ARKX in 2026 is materially less "pure space" than its name suggests, and the manager has been transparent about this drift.

The fund was launched March 2021 at the peak of the SPAC-space cycle, fell ~70% from launch to 2023 trough, and has rallied back as the broader theme reignited. It's now a flagship Ark product alongside ARKK.

Index methodology / rebalance

No index — daily active rebalancing. Ark publishes its holdings every trading day after the close, which is unusually transparent and means tracking error vs. self is zero by definition but tracking error vs. theme is whatever Ark wants it to be.

Turnover is high: ARKX has run 40-60% annual turnover historically, vs. UFO at <15%. That means you're paying the 0.75% expense ratio AND eating internal trading costs (estimated 15-25 bps annualized). Active management is expensive even when the manager doesn't admit it.

Rebalance triggers tend to cluster around earnings prints and major contract awards. Ark has a documented pattern of adding to winners and trimming losers (momentum-tilted), which works in the cycle phase we're in but reverses brutally in drawdowns.

AUM, expense ratio, daily volume

AUM is approximately $929.6M as of May 21, 2026 — slightly larger than UFO ($889M), which is striking because ARKX was a perennial outflow story from 2021-2024. The 2026 rally has driven a 40%+ AUM recovery. Expense ratio 0.75%, identical to UFO and NASA. Daily volume runs 600K-1M shares — meaningfully more liquid than UFO on a share-volume basis.

Bid-ask spreads tight (3-5 bps). Premium/discount to NAV is generally inside ±15 bps, but because Ark publishes holdings daily, AP arbitrage is highly efficient and prem/disc rarely sustains.

Top 10 holdings + concentration

Top 10 as of early 2026: L3Harris (LHX) 9.62%, Kratos (KTOS) 7.77%, Rocket Lab (RKLB) 7.21%, Teradyne (TER) 6.68%, Deere (DE) 6.39%, plus five more for a top-10 = 57.02% of fund. Only 33 total holdings, meaning the bottom 23 names share just 43% of weight. That's materially more concentrated than UFO (top-10 49.55% across 54 names).

The composition is the story: of the top 5, only RKLB is a pure-play space name. LHX and KTOS are defense primes/subs with significant but not majority space exposure. TER is a semiconductor capital-equipment name. DE is industrial machinery. So ARKX is roughly half-defense, quarter-space-pure-play, quarter-adjacencies. If you want clean exposure to RKLB, ASTS, PL, FLY in an ETF wrapper, ARKX is NOT it — UFO or NASA are.

Geographic mix is 88.8% US, vs. UFO's roughly 75% US.

What's happening at largest holding (LHX)

L3Harris at 9.62% is the largest single bet. LHX is a defense prime ($25B revenue, $50B market cap) with growing space exposure through its Mission Networks and Space Systems segments — roughly 25-30% of LHX revenue is now space-classified, primarily Space Force ground control, missile-warning satellite buses, and resilient comms. LHX has been a recent contract winner under the FY26 defense budget — the Space Development Agency's Tranche 2 Tracking Layer award in March 2026 was an estimated $400M to the LHX-Rocket Lab consortium. RSI on LHX is 53 — neutral. It has not melted up the way the pure-plays have.

The implication for ARKX: with 9.62% in LHX, the fund's beta to "defense budget continuation" is materially higher than UFO's. Any FY27 budget skirmish (continuing resolutions, sequestration risk) flows through LHX → ARKX directly.

Alternative ETFs: UFO vs ARKX vs NASA vs ITA — when to use which

ARKX's lane is: "actively managed defense-tech crossover ETF marketed as space." Use it when you specifically want concentrated exposure to LHX + KTOS + RKLB as a basket and you trust Ark to rotate the long tail. Avoid it when you want pure-play space exposure (UFO is broader, NASA is more SpaceX-tilted) or when you want low-fee defense-prime exposure (ITA is 35 bps cheaper for similar large-cap defense names).

Versus UFO: more concentrated, more defense-tilted, daily active, same fee. Wins when defense names lead; loses when pure-play new-space leads.

Versus NASA: missing SpaceX entirely. NASA gives you the SpaceX private mark; ARKX doesn't.

Versus ITA: ARKX top-5 overlap with ITA is meaningful (LHX is in ITA at 4-5%, RTX is in ITA at 14.7% but absent from ARKX). ARKX gives you defense-tech innovation tilt; ITA gives you cap-weighted defense primes. ARKX is the more aggressive expression, ITA is the more conservative one.

Structural risk: index methodology, liquidity, tracking error

Manager risk is the dominant structural risk. Ark has a public track record of (a) concentrating heavily, (b) doubling down in drawdowns, (c) and rotating themes aggressively. ARKX could plausibly be 40% AI-robotics-adjacent and 30% defense-tech by 2027 if Ark decides the space narrative is exhausted. There is no methodology constraint to prevent this.

Thesis drift risk is the related concern: the fund name says "Space Exploration & Innovation" but Ark has interpreted "innovation" loosely enough to include Deere and Teradyne. If you are buying ARKX as a "space" wrapper, you are not getting what's on the label.

Daily-rebalance friction is the third risk: 40-60% annual turnover plus a flowing AP creation/redemption book means ARKX accumulates implicit trading costs that the headline 0.75% fee doesn't show.

Concentration risk is meaningful: top 10 = 57% means a single-name blow-up at LHX, KTOS, or RKLB would drag the fund disproportionately. RKLB at 7.21% has RSI 69 and is in melt-up territory — single-name mean reversion is the near-term risk.

Bull / Gap / Optionality

Bull

1. Defense budget tailwind via LHX + KTOS overweight. FY26 defense budget is set, FY27 is in mark-up, both trending up. Combined LHX + KTOS weight (17.39%) gives ARKX direct mechanical beta to budget continuation that UFO doesn't have.

2. Active rotation flexibility in late-cycle tape. UFO is forced to hold SIRI and VSAT at index weight regardless of fundamentals. ARKX can trim or exit. In a topping market that flexibility is structural alpha — assuming Ark uses it.

3. AUM momentum has flipped positive after 3-year drought. ARKX saw net inflows for 12 of the last 16 weeks per ETF.com data. Once Ark's flow narrative reverses (post-2023 trough), self-reinforcing inflows tend to persist.

4. Tighter portfolio means cleaner upside in pure-play rallies. Only 33 names vs. UFO's 54 means each pure-play winner pulls more weight. RKLB at 7.21% in ARKX contributes more to NAV than RKLB at 7.37% in UFO simply because ARKX has fewer dilutive long-tail names.

Gap

1. Half the fund is not space. LHX, TER, DE, plus several mid-cap industrials add up to ~40% of weight in names where space is a minority of revenue. If you wanted defense, you should be in ITA at 0.40% fees. If you wanted broad industrials, in VIS at 0.10%. Paying 0.75% for an actively-managed defense-tech basket marketed as space is structurally overpaying.

2. RSI ~65 and +12% vs 50MA — late. Same melt-up tape as UFO; entry is chasing.

3. Manager turnover / thesis drift risk. Ark's portfolio composition has shifted materially in past cycles. There's no constraint on the manager rotating out of space entirely if they see better innovation elsewhere — and the fee stays the same regardless.

4. Daily holdings disclosure invites front-running. Ark publishes daily — every other fast-money desk knows what Ark holds and when they adjust. That has historically driven ~25-50 bps of annual drag from APs/HFs pre-positioning ahead of Ark trades.

Optionality

The trade

ARKX is a more concentrated, more defense-tilted, actively-managed alternative to UFO with identical fees. The use case is: you want space-theme exposure with a defense kicker and you trust Ark's stockpicking. Entry zone: $32.74-$36.18 (current ±5%). Sizing: 1.5% of risk capital — smaller than UFO because the active risk is opaque. Treat as a satellite position to UFO, not a substitute. Stop: $30.50 (just below 50MA, structural support). Catalyst: LHX SDA Tranche 3 award + Q3 2026 RKLB Neutron flight. Pivot: if you want the same defense-tilt with lower fees and cap-weighted discipline, ITA at 0.40% gets you most of the LHX + RTX exposure for half the cost; if you want pure space without the defense overlap, UFO is broader and NASA is purer.

Conviction: 5 / 10. Good vehicle for a specific use case; mispriced as a "space ETF" because half of it isn't.

ticker: NASA name: Tema Space Innovators ETF theme: Space & Aerospace bucket: E conviction: 5 entryzonelo: 34.69 entryzonehi: 38.35 currentprice: 36.52 pricedate: 2026-05-22 positionsizepct: 1.5 stoploss: 32.00 thesisoneline: Only listed ETF holding SpaceX directly via private-share equivalents; narrower portfolio, smaller AUM, structurally higher NAV opacity but unique private-mark exposure. catalystnext: SpaceX IPO or new private valuation round catalystdate: 2026-09-30 rsi: 64.0 vs50ma: 11.0 forwardpe: 0 themecycleposition: late customermixsummary: ~20-40 holdings, SpaceX private position ~17-18% of fund (~$59M at $1.56T implied mark). terminalriskoneline: NAV depends on private SpaceX mark — if Ark or other holders re-price SpaceX down, NASA gaps without warning. bulldriverscount: 4 gapriskscount: 4 optionalitycount: 4 lastearningsdate: nextearnings_date: