ETFs to Tap the Trending Space Tourism Market

Sweta Jaiswal, FRM

We are living in an era that is highly driven by technological advancements. And very soon, traveling to Mars or the outer space for a vacation won’t be an unthinkable notion. Over the past decade, several private and public companies have been running trials and working with NASA to develop spacecraft and advance in the space tourism field. In fact, recently, Virginia-based Space Adventures provided details on the planned mission through which it will create a “world altitude record for private citizen spaceflight” as soon as late-2021. For this, the company has an agreement with SpaceX to fly a Crew Dragon mission by sending four space tourists to space levels twice as high as that of the International Space Station.

Recent developments and further research in the pipeline are expected to provide support to the space tourism industry in the near term. In fact, over the next five years, the space tourism market is expected to see a 16.6% CAGR in terms of revenues, and the global market size will reach $1180 million by 2024 from $550 million in 2019.

Additionally, Morgan Stanley estimates that the global space industry will generate revenues of $1.1 trillion or more by 2040. Bank of America expects the space economy to grow to $3 trillion in the same time period.

Riding on the trend, an aerospace company, Virgin Galactic Holdings, Inc. SPCE, which develops human spaceflight for private individuals and researchers, has been soaring high in 2020. It has already gained 37.4% in the current year (as of Feb 19, 2020). The company has been steadily moving toward making its next two spaceships with its second ship achieving the 'weight on wheels' milestone. In 2020, the company plans to launch 16 flights. It is also expected to achieve profitability by the end of 2021. It is worth noting here that the company holds a commercial space launch license. It has some popular names like Bryan Singer and Angelina Jolie in the waiting list of fliers.

Space ETFs to Gain

Following are some ETFs that investors can consider if they wish to park their money in this high-potential space:

Procure Space ETF UFO

The Procure Space ETF seeks investment results that correspond generally to the performance, before the fund’s fees and expenses, of an equity index called the “S-Network Space Index” developed by S-Network Global Indexes. The fund’s underlying index is designed to measure the performance of companies engaged in space-related industries. Holding a basket of 30 stocks, the fund has an AUM of $22.4 million. It has an expense ratio of 75 basis points (bps). Notably, with 16.86% weight, Virgin Galactic Holdings takes the top spot in the fund. Maxar Technologies and Iridium Communications take the second and third position, with 6.42% and 5.43% weight, respectively.

The fund has gained 12.1% in the past year and 7% in the year-to-date period (read: Why Space ETFs Are Taking Off).

The SPDR S&P Kensho Final Frontiers ETF ROKT

The fund seeks to track an index utilizing artificial intelligence and a quantitative weighting methodology to capture companies whose products and services are driving innovation in the exploration of the final frontiers, which include areas of outer space and the deep sea. Holding a basket of 26 stocks, the fund has an AUM of $7 million. It has an expense ratio of 45 bps. Notably, with 6.84% weight, Maxar Technologies makes it to the top spot in the fund. L3Harris Technologies and Lockheed Martin take the second and third position, with 5.23% and 5.14% weight, respectively.

The fund has gained 25.3% in the past year and 7.4% in the year-to-date period (read: 7 Most-Searched ETF Areas in the Past 7 Days).

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SPDR S&P Kensho Final Frontiers ETF (ROKT): ETF Research Reports
 
Procure Space ETF (UFO): ETF Research Reports
 
Virgin Galactic Holdings, Inc. (SPCE) : Free Stock Analysis Report
 
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