Space ETF race heats up with two new European launches

The Global X Space Tech UCITS ETF and First Trust Bloomberg Space Economy UCITS ETF both began trading on 30 July, giving European investors new ways to gain exposure to businesses involved in satellites, rocket launches, space infrastructure and related technologies.

The launches came less than two months after BlackRock and WisdomTree introduced their own European space ETFs, underlining how quickly the theme has become one of the more competitive areas of thematic product development.

The Global X Space Tech UCITS ETF trades under the ticker LUNR on the London Stock Exchange and Deutsche Börse Xetra and has a total expense ratio of 0.50%. It tracks the Mirae Asset Space Tech UCITS Index.

The index covers four areas: rocket launches and reusable rockets, space technology and components, satellite communications and data services, and space transportation, tourism and exploration.

New constituents must generate at least 50% of their revenues from qualifying space-related activities, while existing constituents can remain eligible with at least 40%. The rules are designed to limit exposure to diversified industrial and defence companies for which space represents only a small part of their overall business.

The First Trust Bloomberg Space Economy UCITS ETF has listed on the London Stock Exchange and Borsa Italiana with a total expense ratio of 0.65%. Its US dollar listing trades under the ticker FSPC, while its sterling listing uses LUNA.

The ETF tracks the Bloomberg Space Economy Index, which selects up to 50 companies from the Bloomberg Intelligence Space Basket. Eligible businesses are divided into Gold and Silver tiers. Gold-ranked companies can account for up to 4.5% of the portfolio, while Silver-ranked constituents are capped at 3%. The index is rebalanced quarterly.

First Trust said falling launch costs and advances in reusable rocket technology had permanently changed the economics of the space industry, creating opportunities across satellite technology, security, data and infrastructure.

The theme does however remain small. BlackRock’s iShares Space Technologies UCITS ETF had grown to around $25m by mid-August, while WisdomTree’s fund had attracted roughly $11m.

Our view

David Batchelor, senior analyst at QuotedData, said: “These two launches shows how quickly ETF providers are responding to growing interest in the commercial space industry, but investors should be careful not to assume that all space ETFs offer the same exposure.

The underlying theme is wide, spanning reusable rockets, satellites, communications, defence, data and infrastructure, and the way an index defines the space economy can have a major impact on the resulting portfolio.

The differences between funds in the sector are already visible in their portfolios. As of 14 August, Global X’s new fund held 37 stocks, with SpaceX accounting for around 15% of assets, followed by AST SpaceMobile and Rocket Lab. By comparison, SpaceX represented around 10% of WisdomTree’s rival Space Economy UCITS ETF.

That makes the index methodology particularly important. Revenue thresholds, position limits and the treatment of diversified aerospace and defence companies can matter just as much as the headline fee”.