SpaceX IPO Pumps Rocket Fuel into Thematic Space ETFs 

SpaceX’s IPO is almost here, and investors are looking to hitch a ride to the moon. 

Ahead of the highly anticipated public debut of Elon Musk’s rocket company expected June 12, funds with exposure are quickly gaining popularity. While SpaceX is offering some of its IPO shares directly through brokerages including Robinhood, Fidelity and Charles Schwab, investors can also get a piece of the moon pie through a product that launched in March: Tema ETFs’ Space Innovators ETF (NASA). As of June 1, NASA has a 6.88% weighting in SpaceX via a special purpose vehicle, and investors are biting, with the fund gathering roughly $2.6 billion in assets since inception. 

“What NASA did is totally unnatural,” Bloomberg ETF analyst Eric Balchunas said about the fund transitioning from a newborn to the top of the category in just around two months. The NASA ticker helped, but since the fund is from a small indie firm — and competing with heavyweights in the space ETF category such as Cathie Wood’s ARK Invest — exposure to the soon-to-be public company is the main driver, Balchunas added. “It’s the SpaceX effect.” 

Cleared for Launch  

SpaceX’s stock may have permeated the zeitgeist, but will those NASA ETF investors stick around for the long haul? 

“If you are a believer in the space economy and the buildout and the expectations, you’ll hang around,” said Todd Sohn, chief ETF strategist at Strategas. “The other cohort is the fast money who are taking advantage of this run-up, and I suspect that they’ll leave pretty quickly.” 

Single-theme ETFs are known to be boom and bust, he adds, pointing to fervor around cybersecurity and cannabis ETFs that eventually dwindled. A theme gets hot, multiple issuers come out with the same kind of product and volatility really starts to pick up, Sohn said. “I would just be very mindful of that, and that everyone is involved in this kind of IPO. I would expect more volatility to occur, and that may shake out some tactical holders.” 

NASA isn’t the only space ETF benefiting from the upcoming listing: 

• ProcureAM’s Procure Space ETF (UFO), which launched in 2019, crossed the $1 billion threshold last week. 
• The ARK Space & Defense Innovation ETF (ARKX) and State Street SPDR S&P Kensho Final Frontiers ETF (ROKT) gained roughly 22% and 47% this year, respectively, throughTuesday morning. 

Choosing a Trajectory. The thematic ETFs will probably get you the most bang for your buck when it comes to exposure to SpaceX, Sohn said. But for many investors, it probably makes sense to stick with a broad-based index fund that will offer you some exposure, albeit to a lesser degree.