The upcoming SpaceX IPO is igniting a “space race” among retail investors, with specialized ETFs like Tema ETFs’ NASA rapidly accumulating billions in assets by offering direct exposure to Elon Musk’s private rocket company. This surge in interest, drawing parallels to the early days of AI investing, provides everyday investors with an accessible pathway to the burgeoning space economy, though experts caution about significant market volatility and the need for careful due diligence.
Retail investors are increasingly turning their gaze skyward, eagerly investing in space-themed exchange-traded funds (ETFs) as the highly anticipated SpaceX initial public offering (IPO) approaches. One particular fund, Tema ETFs' Space Innovators ETF, trading under the ticker NASA, has seen an astonishing surge, accumulating over $2.6 billion in assets within just two months of its launch on March 30.
This remarkable growth is largely attributed to retail investors seeking early exposure to Elon Musk's pioneering rocket company. While SpaceX has uniquely arranged direct access for retail investors through brokerage platforms—a rare move often dominated by institutional players—the NASA ETF presents another compelling avenue. Notably, it already holds privately traded SpaceX shares, which constitute approximately 7.5% of the fund's portfolio, making it one of the few direct investment vehicles available to the public.
Maurits Pot, founder and CEO of Tema ETFs, emphasized the fund's commitment to its mission: "If we're going to invest in space... We have to offer exposure to SpaceX." Pot also clarified that there are no plans to divest these shares post-IPO, viewing the public offering merely as a re-marking of the position to market price.
NASA is not alone in providing a pathway to SpaceX. Billionaire mutual fund manager Ron Baron, a long-time supporter of Tesla and SpaceX, incorporates the rocket company into his First Principles fund (RONB). While Tesla is its largest holding, SpaceX accounts for nearly 2% of the fund's assets. Similarly, the ERShares Private-Public Crossover ETF (XOVR), which specializes in late-stage private companies, also holds significant SpaceX shares, estimated to be worth close to $300 million based on an anticipated IPO valuation of over $1.5 trillion.
Chart: One-month performance of NASA ETF.
The ability of ETFs to democratize access to such high-profile, early-stage investments was highlighted by Mike Akins, founding partner at ETF Action. "Ten, twenty years ago, you talked about a space theme like this, an investor would have to go out and look up all these companies. Now there's a ticker," Akins explained.
This burgeoning interest has spurred a flurry of new offerings. Todd Sohn, chief ETF strategist at Strategas, noted that six new space-themed ETFs have debuted in recent months, including the Van Eck Space ETF (WARP), the Global X Space Tech ETF (ORBX), and Roundhill Investments' Space & Technology ETF (MARS). Sohn views this as a strong signal that the industry anticipates space to be "the next big thing," drawing parallels to the early wave of AI investing.
However, Sohn cautioned investors that "not all funds are created equal." He stressed the importance of due diligence, as funds vary significantly in their "purity" (direct space exposure) and diversification. Older space-themed ETFs, such as the Procure Space ETF (UFO), launched in 2019, have built portfolios including pure-play space exploration firms like Rocket Lab, Firefly Aerospace, and Planet Labs. The SPDR S&P Kensho Final Frontiers ETF (ROKT), active since 2018, includes companies like Intuitive Machines and Redwire.
Chart: Five-year performance of UFO ETF which invests in space and aerospace stocks.
The definition of a "space stock" can also be broad, as exemplified by the ARK Space and Defense Innovation ETF (ARKX), which diversifies into companies like Amazon and Deere. Investors should scrutinize portfolio overlap with traditional defense industry names and fund concentration in high-risk stocks. Additionally, the management style impacts costs; actively managed funds like NASA have an annual net expense ratio of 0.87%, higher than passively managed alternatives like ORBX (0.50%) and ROKT (0.45%).
While the SpaceX IPO is poised to potentially crown Elon Musk as the world's first trillionaire, both Akins and Sohn underscored the primary risk for retail investors: extreme volatility. The recent launchpad explosion of Blue Origin's New Glenn rocket served as a stark reminder of the inherent dangers and unpredictability in the early-stage space industry. "Expect volatility. That is usually what happens with very early-stage industries. There will be companies that outperform and companies within ETFs that fall apart because the business model doesn't make sense," Sohn warned, urging investors to prepare for significant market fluctuations.
