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This article identifies the four best space ETFs, discusses their differences, offers alternatives to them, and outlines their risk profiles.
Understanding The Best Space ETFs
Space exchange-traded funds provide diversified exposure to the growing space industry.
With few pure-play space stocks in the market, investors are turning to ETFs to reduce their risk. Next, we’ll examine the best space ETFs to buy in 2022 and beyond.
Best Space ETFs
#1. ARK Space Exploration (ARKX)
- Performance over 1-Year: -32%
- Expense Ratio: 0.75%
- Percent Off All-Time High: -73%
- Assets Under Management: $286 million
The ARK Space Exploration & Innovation ETF is an actively managed fund that invests in space exploration and innovation companies.
ARK groups these companies into four categories:
- Orbital Aerospace Companies
- Suborbital Aerospace Companies
- Enabling Technologies Companies
- Aerospace Beneficiary Companies
The main holdings in ARKX consist of defense and satellite communication companies — two industries that are likely to benefit from space exploration in the short to medium term.
However, you’ll also get some exposure to ‘beneficiary’ companies like Netflix (NFLX).
Netflix isn’t sending rockets into space, but its bandwidth and streaming experience will improve as applications in the space economy progress.
ARK has also embedded its own 3D Printing ETF within ARKX and made it a top ten holding.
Cutting costs is the space industry’s primary focus right now — 3D printing parts, engines, and entire rockets greatly reduce the costs per ton of going to space.
3D printing also allows astronauts to make repairs and replacements in space.
ARKX is one of the most ambitious funds in ARK’s suite of active ETFs, including their Innovation ARKK and Genomic ARKG ETF.
ARKX Top Holdings:
- Trimble (TRMB) 9.52%
- Kratos Defense & Security Solutions (KTOS) 7.45%
- Iridium Communications (IRDM) 7.32%
- AeroVironment (AVAV) 6.60%
- L3Harris Technologies (LHX) 5.94%
ARKX is one of six active ARK exchange-traded fundsoffered by Cathie Wood.
#2. Procure Space ETF (UFO)
- Performance over 1-Year: -29%
- Expense Ratio: 0.75%
- Percent Off All-Time High: -39%
- Assets Under Management: $66 million
The Procure Space ETF (UFO) has the best ticker symbol in this article and provides access to the following space-related industries:
- Ground Equipment Manufacturing Dependent Upon Satellite Systems
- Rocket and Satellite Manufacturing and Operation
- Satellite-based Telecommunications, Radio, and Television Broadcasting
- Space Industry Segments like Space-based Imagery and Intelligence Services
- Space Technology and Hardware
However, you’ll notice that UFO’s top holding is Virgin Galactic (SPCE), a space tourism company that takes the average Joe to space.
Virgin Galactic fits into UFO’s ‘Emerging Space Industries’ criterion, which looks at companies engaged in the following:
- Space Tourism, Transportation, and Hospitality
- Space-based Military and Defense Systems
- Space Resource Exploration and Extraction
- Space Colonization and Infrastructure
- Space Technologies that Enable the Space Economy
So when the Winklevoss twins talk about extracting gold from space and thus increasing its ‘fixed’ supply, the companies in UFO will make that happen.
Additionally, UFO mentions ‘Space-based Military and Defense Systems.’
The Department of Defense has historically been on the cutting edge of new frontiers, especially space.
The United States launched the Space Force in 2019, the newest branch of the Armed Forces, to protect U.S and allied interests in space.
We expect federal funding to flood space-related industries in the coming years, at least relative to levels seen from 1997 to the present.
In the heat of the space race with the Soviet Union, the U.S. allocated as much as 4.41% of total government spending to NASA. That number fell to 0.48% in 2020.
Military-Industrial companies like Lockheed Martin, Raytheon, Boeing, and Northrop Grumman are mid-level holdings in UFO, representing an aggregate of 9% of the ETF.
UFO Top Holdings:
- Iridium Communications (IRDM) 5.62%
- Virgin Galactic (SPCE) 5.42%
- Sirius XM Holdings (SIRI) 5.36%
- Garmin (GRMN) 5.04%
- Eutelsat Communications (ETL) 4.77%
#3. SPDR S&P Kensho Final Frontiers ETF (ROKT)
- Performance over 1-Year: -12%
- Expense Ratio: 0.45%
- Percent Off All-Time High: -22%
- Assets Under Management: $17 million
The SPDR S&P Kensho Final Frontiers ETF (ROKT) invests in companies “driving innovation behind the exploration of the final frontiers, which includes the areas of outer space and the deep sea.”
Companies in ROKT are involved in “the expansion of human understanding and presence in outer space and in the oceans,” hence the significant allocation to Virgin Galactic.
Additionally, ROKT is the only ETF to reference the oceans, much of which is still unexplored.
It’s also the only fund on this list to directly refer to “Aerospace and Defense” equities.
ARKX and UFO invest in these companies too, but explicitly defining this category suggests how ROKT differs from the pack.
The second highest sector weight is ‘Alternative Carriers’ at 7.8%, followed by ‘Research & Consulting Services’ at 7.0%, and ‘Industrial Machinery’ at 6.1%.
The geographic breakdown is another differentiator for ROKT. It invests nearly 100% of its fund into American companies, while ARKX and UFO do 74% and 76%, respectively.
ROKT Top Holdings;
- Boeing Company (BA) 4.18%
- Iridium Communications (IRDM) 4.16%
- Northrop Grumman (NOC) 3.85%
- Virgin Galactic Holdings (SPCE) 3.72%
- Aerojet Rocketdyne Holdings (AJRD) 3.68%
#4. The 3D Printing ETF (PRNT)
- Performance over 1-Year: -40%
- Expense Ratio: 0.66%
- Percent Off All-Time High: -59%
- Assets Under Management: $191 million
The 3D Printing ETF (PRNT) tracks companies in an index that are involved in the following:
- 3D Printing Hardware
- Computer-Aided Design (CAD)
- 3D Printing Simulation Software
- 3D Printing Centers
- Scanning and Measurement
- 3D Printing Materials
ARK believes that 3D printing is “misunderstood today” but “expects 3D printing to revolutionize manufacturing by collapsing the time between design and production, reducing costs, and providing greater design complexity, accuracy, and customization.”
As previously mentioned in the ARKX analysis of this article, 3D printing is driving down the costs of going to space.
For example, a company called Relativity Space 3D prints entire rockets.
In addition, it is building the first autonomous rocket factory and launch services for satellites, which improve production speeds by a factor of ten while requiring 100x fewer parts than traditional rocket manufacturers.
Relativity Space is not a holding in PRNT — because it’s not even a public company yet — but it displays the potential of 3D printing, artificial intelligence, and their space-related applications.
Investing in The 3D Printing ETF is a second-order bet on the rising space economy.
PRNT Top Holdings:
- PTC Inc. (PTC) 4.37%
- Nano Dimension (NNDM) 4.12%
- Microsoft (MSFT) 3.87%
- Autodesk (ADSK) 3.78%
- Atlantic Coastal Acquisition Corp. (ACAH) 3.77%
Alternatives to the Best Space ETFs
They’re the best space companies but still private as of this writing.
However, don’t hold your breath. SpaceX has no plans to go public anytime soon, and Bezos has privately funded Blue Origin thus far.
Starlink will likely be the first to IPO. It began as a side project at SpaceX but has become a significant part of SpaceX’s $74 billion valuation.
Best Space ETFs: Risks
The space economy is a great example of ‘gradually, then suddenly.’
The duration of ‘gradually’ and when ‘suddenly’ starts are the primary risks to owning space ETFs.
The Gartner Hype Cycle describes how exponential technologies evolve — it’s not obvious where space technologies are in this cycle.
Here’s another relevant quote: “Most people overestimate what they can do in one year and underestimate what they can do in ten years.”
We’re probably overestimating our space capabilities in 2030 and wildly underestimating what we’ll be doing in 2060.
The degree that you overestimate in the short-term could negatively affect your portfolio — and vice versa.
Best Space ETFs: FAQs
What is the best space ETF?
The best space ETFs are the ARK Space Exploration ETF (ARKX), Procure Space ETF (UFO), and SPDR S&P Kensho Final Frontiers ETF (ROKT). Given the role of 3D printing in the space industry, ARK’s 3D Printing ETF (PRNT) is another fund to consider.
Is MOON a good ETF?
The Direxion Moonshot ETF (MOON) is a good ETF for investors looking to own stock with the potential for disruptive impact. The ETF invests in virtual reality, wearables, smart buildings, autonomous vehicles, and drone markets.
Is there a space exploration ETF?
There are three space exploration ETFs on the market:
- ARK Space Exploration ETF (ARKX)
- Procure Space ETF (UFO)
- SPDR S&P Kensho Final Frontiers ETF (ROKT)
What is the best space stock to buy?
Here are the best space stockstrading in the stock market:
- Boeing (BA)
- Lockheed Martin (LMT)
- Northrop Grumman (NOC)
- Virgin Galactic (SPCE)
- Rocket Lab (VACQ)
- Kratos Defense & Security Solutions (KTOS)
- L3Harris Technologies (LHX)
- Iridium Communications (IRDM)
These stocks provide various types of exposure to the space economy.
Bottom Line: Best Space ETFs
We think a space ETF is a better investment than individual space stocks at this point in time.
It’s such a new field, and picking individual winners will be tough. Consider buying a space ETF for broad exposure to a growing industry.
This article is for informational purposes only, and it is not intended to be investment advice. Read our editorial guidelines and public equities research methodology to learn more about how we selected the best space ETFs.
This article was updated on July 18th, 2022 to reflect the changes in performance, holdings, and other relevant characteristics of each fund.