Why Is John Deere Part Of The New Ark Funds Space ETF?

The Ark Space Exploration & Innovation ETF ARKX launched last week and many of the holdings were surprises to investors looking for a pure play on space companies.

What Happened: One of the most surprising names in the new Ark space ETF was Deere & Company DE. The farm equipment maker is the 13th largest holding in the new ETF, representing $10.8 million and 3.1% of the fund’s assets as of Thursday.

The inclusion shows Ark is not only including pure space companies. The fund also will hold companies that could benefit from the growth of space.

“Aerospace beneficiary companies are companies whose operations stand to benefit from aerospace activities, including agriculture, internet access, global positioning system, construction, imaging, drones, air taxes and electric aviation vehicles,” according to Ark Funds.

Related Link: Cathie Wood Could Be Launching A Space Exploration ETF 

Why It’s Important: Since the 1990s, John Deere has worked on using GPS technology to improve precision agriculture.

In 2018, John Deere partnered with NASA to improve its self-driving tractors. The company tapped into NASA’s global network of ground stations. 

Most self-driving tractors cultivating the majority of American farmland rely on NASA technology. The NASA model for commercial software can help predict yields and classify land types using satellite imagery.

“This innovation resulted in perhaps one of NASA’s most important contributions to modern society — highly accurate GPS navigation anywhere on Earth, including crop fields,” the Food Institute said on the GPS improvements brought from NASA software.

The link between space and agriculture companies appears here to stay: In December 2020, NASA and the U.S. Department of Agriculture extended a long-standing partnership on space-based assets.

Ark Funds sees Deere & Company and other agricultural-related names, such as top holding Trimble Inc TRMB, as winners in the growth of satellites and GPS.

DE Price Action: Shares of Deere & Company ended the week up 0.29% at $372.12.

Related Link: ARKX Isn't The First Space ETF: Here's How The Others Have Performed

(Photo: Deere & Company)