Summary: Space exploration and technology are charting new frontiers beyond our planet. For investors keen on tapping into this vast potential, ETFs offer a diversified entry point, covering multiple industry leaders. Indeed, investing in space ETFs through regulated brokers like Interactive Brokers can spread risk across various players in the sector, capturing the industry’s growth while mitigating individual company volatility. In this guide, we preset the top 3 space ETFs to buy in 2024.
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What are space ETFs?
Space ETFs (exchange-traded funds) are investment funds traded on stock exchanges that focus on companies in the space industry. These funds typically hold a basket of stocks related to space exploration, satellite technologies, aerospace defense, and other related sectors.
Here are a few reasons why Space ETFs are gaining attention:
- Growth potential: The space industry is witnessing significant technological advancements and increased private-sector participation, leading to potential growth opportunities;
- Diversification: Space ETFs allow investors to diversify their portfolios by gaining exposure to a range of companies within the space industry without having to pick individual stocks;
- Broad exposure: Space ETFs might include companies involved in satellite communication, rocket manufacturing, space tourism, asteroid mining, space-based solar power, and more;
- Liquidity: Like other ETFs, Space ETFs can be bought or sold on stock exchanges just like individual stocks, offering liquidity to investors.
While investing in space ETFs provides diversified exposure, some investors also like to invest directly in individual stocks. Here are some top space stocks to consider:
- Virgin Galactic (NYSE: SPCE);
- Maxar Technologies (NYSE: MAXR);
- Lockheed Martin (NYSE: LMT);
- Astra (NASDAQ: ASTR);
- Rocket Lab (NASDAQ: RKLB);
- Planet Labs (NYSE: PL).
Top 3 Space ETFs to Buy in 2024
For those intrigued by the expansive potential of the space and defense sector, several ETFs offer diversified exposure to industry leaders and innovators. Here are three notable options for potential investors to consider:
- SPDR S&P Aerospace & Defense ETF (NYSE: XAR);
- Invesco Aerospace & Defense ETF (NYSE: PPA);
- Direxion Daily Aerospace & Defense Bull 3X Shares (NYSE: DFEN).
To securely invest in any of these space ETFs, we recommend Interactive Brokers (IBKR), which offers:
- Commission-free stock and ETF trading;
- Trade stocks on 90+ market centers;
- Fractional stock trading;
- Earn extra income on fully paid shares;
- Lowest financing rates for margin accounts in the industry;
- No account minimum.
Best Platform for Worldwide Stock Trading & Investing
-
Highly trusted multi-asset broker with clients in over 200 countries
-
Trade on 150 markets globally from a single platform (stocks, ETFs, futures, currencies, crypto & more)
-
Low commissions starting at $0 with no platform fees or account minimums
-
Easily fund your account and trade assets in 26 currencies
-
IBKR pays up to 4.58% interest on cash balances of $10k or more
Now, let’s examine each ETF a bit more in detail.
1. SPDR S&P Aerospace & Defense ETF
Total Net Assets: $1.98B
Fund Inception Date: September 28, 2011
Overseen by State Street Global Advisors, the SPDR S&P Aerospace & Defense ETF (NYSE: XAR) has successfully accumulated assets of almost $2 billion, positioning it among the larger ETFs in the Industrials sector.
The fund aims to mirror the performance of the S&P Aerospace & Defense Select Industry Index, which represents the aerospace and defense segment of the S&P Total Stock Market Index (S&P TMI). The Index adopts a modified equal-weight approach.
XAR price today
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2. Invesco Aerospace & Defense ETF
Total Net Assets: $2.43B
Fund Inception Date: October 26, 2005
The Invesco Aerospace & Defense ETF (NYSE: PPA) seeks to replicate the performance of the SPADE™ Defense Index, typically investing a minimum of 90% of its overall assets in common stocks within this Index.
This Index is structured to identify companies engaged in the development, production, operations, and support of U.S. defense, homeland security, and aerospace endeavors. Both the ETF and the Index undergo rebalancing and reconstitution on a quarterly basis.
PPA price today
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3. Direxion Daily Aerospace & Defense Bull 3X Shares
Total Net Assets: $176.13M
Fund Inception Date: May 3, 2017
The smallest of the three, Direxion Daily Aerospace & Defense Bull 3X Shares (NYSE: DFEN), follows the Dow Jones U.S. Select Aerospace & Defense Index.
The Dow Jones U.S. Select Aerospace & Defense Index (DJSASDT) is provided by S&P Dow Jones Indices LLC (known as the “Index Provider”) and aims to capture the performance of the U.S. aerospace and defense sector. To assemble the Index, the Index Provider chooses stocks from the aerospace (manufacturers, assemblers, and distributors of aircraft and aircraft parts) and defense (producers of components and equipment for the defense industry, e.g., military aircraft, radar equipment, and weapons) field, relying on every constituent’s float-adjusted market capitalization weight.
DFEN price today
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Pros and cosn of invetsing in space ETFs
Pros
- Diversification: Investing in a space ETF allows you to diversify your holdings across multiple companies in the space industry rather than betting on a single stock. This can help mitigate risk;
- Growth potential: The space industry is relatively young and has significant growth potential, with numerous opportunities arising from satellite technology, space tourism, and possible asteroid mining;
- Innovation and technological advancements: As technology evolves, companies in the space sector may unveil breakthrough innovations that can drive substantial returns for investors;
- Early mover advantage: As space exploration and related technologies become more mainstream, early investors might benefit from potential industry booms in the coming decades.
Cons
- High volatility: The space industry can be highly speculative. Investments can be subject to wide price swings based on technological developments, regulatory changes, or other unpredictable factors;
- Regulatory and political risks: The space industry is subject to regulations that can change based on international treaties, national security concerns, and other political factors;
- Operational risks: Space missions can be costly and risky. Any operational failure, like a failed satellite launch or a space tourism accident, can significantly impact companies in this sector;
- Maturity of the industry: Many companies in the space sector, especially those focused on space tourism or exploration, may not be profitable for several years. This long path to profitability can test investor patience;
- Competitive pressure: As the allure of space grows, more companies will enter the sector, which can dilute opportunities and increase competition, potentially affecting returns;
- High costs and barriers: Space exploration and related activities come with high costs, which means companies require substantial capital. If funding dries up, it can hamper growth.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
FAQs about the top 3 space ETFs to buy to in 2024
What are the best space ETFs to buy?
Space ETFs you might want to consider include SPDR S&P Aerospace & Defense ETF (NYSE: XAR), Invesco Aerospace & Defense ETF (NYSE: PPA), Direxion Daily Aerospace & Defense Bull 3X Shares (NYSE: DFEN).
How to invest in space ETFs?
To buy space ETFs, follow these steps: open an account with an online broker, deposit funds, search for the ETF by its ticker symbol, determine the investment amount, select the order type, and execute the order.
Where to buy space ETFs?
You can invest in space ETFs with regulated online brokers, such as Interactive Brokers.
Best Platform for Worldwide Stock Trading & Investing
-
Highly trusted multi-asset broker with clients in over 200 countries
-
Trade on 150 markets globally from a single platform (stocks, ETFs, futures, currencies, crypto & more)
-
Low commissions starting at $0 with no platform fees or account minimums
-
Easily fund your account and trade assets in 26 currencies
-
IBKR pays up to 4.58% interest on cash balances of $10k or more
