The Tema Space Innovators ETF (NASA) just reached nearly $1.3 billion in assets under management and is now the largest space ETF on the market. The fund, which launched at the end of March, had inflows of $375 million on Wednesday alone and has tripled its AUM since I wrote about it just a week ago.
The catalyst for the latest surge in demand is likely the upcoming SpaceX IPO. On Wednesday, SpaceX publicly filed its S-1 ahead of its much-anticipated listing next month.
NASA’s big selling point is that it’s the only space-themed ETF with exposure to SpaceX. That exposure has allowed it to become the largest space ETF on the market despite being the sixth one to launch, leapfrogging the Procure Space ETF (UFO) and the ARK Space & Defense Innovation ETF (ARKX).
Those ETFs have seen inflows this year too, with $456 million for UFO and $143 million for ARKX, putting them at $972 million and $944 million in AUM respectively. But NASA has clearly resonated more with investors, thanks to SpaceX.
As I pointed out last week, while NASA has performed well since inception, rising 46% versus 32% for UFO and 17% for ARKX, the Roundhill Space & Technology ETF (MARS) launched before it and has done even better with a 53% gain over the same period. That suggested something other than straight performance was drawing investors to NASA.
It’s also worth noting that while investors are clamoring into the ETF for SpaceX exposure, those inflows themselves have ironically cut down on the SpaceX exposure that the fund offers. Last week when I wrote about it, the fund had 10.3% allocated to SpaceX. Now it’s down to 4.6%.
As I’ve written in the past, when an ETF takes in large amounts of new money, the manager often can’t scale the private position fast enough. When that happens, new capital ends up going into public stocks, diluting the exposure investors came for.
So we end up in a strange place. SpaceX hasn’t contributed much to the ETF’s performance, and exposure to the stock isn’t all that significant, especially after recent inflows. But just the fact that SpaceX is in the portfolio, held through an SPV, has been enough to catapult NASA into becoming the biggest space ETF despite being a late entrant into the category.
