SpaceX Has Turned Space Investing Into One of the Hottest Trades of 2026. But Which ETF Is Actually Worth Buying?

First Trust Indxx Aerospace & Defense ETF (NYSEMKT:MISL) offers a lower-cost entry into established defense industrials, while Tema Space Innovators ETF (NYSEMKT:NASA) provides a larger asset base and a narrower focus on space innovation.

Investors looking for exposure to the sky and beyond may find these two funds provide significantly different paths. While the First Trust fund follows a traditional index of defense firms, the Tema fund employs an active mandate to capture the space economy, including satellite communications, launch systems, and space-based data infrastructure across various geographies.

Snapshot (cost & size)

The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

What's inside

The Tema Space Innovators ETF (NYSEMKT:NASA) focuses on companies engaged in the expanding space economy, with largest positions including Rocket Lab (NASDAQ:RKLB) at 9.79%, MDA Space (NYSE:MDA) at 6.54%, and AST SpaceMobile (NASDAQ:ASTS) at 6.49%. It has the flexibility to invest across various market capitalizations and geographies to find innovation.

By comparison, the First Trust Indxx Aerospace & Defense ETF (NYSEMKT:MISL) provides a portfolio of 49 holdings, primarily in industrials (83%) and technology (17%). Its top holdings include Palantir Technologies (NASDAQ:PLTR) at 9.24%, GE Aerospace (NYSE:GE) at 8.01%, and The Boeing Company (NYSE:BA) at 7.78%. Launched in 2022, the First Trust fund paid $0.16 per share over the trailing 12 months.

For more guidance on ETF investing, check out the full guide at this link.

What this means for investors

Space investing has gone from science fiction to serious financial theme almost overnight. The global space economy is forecast to nearly triple by 2035, driven by falling launch costs, broadband satellite expansion, and the early stages of commercial space exploration. That backdrop has sent investors rushing into space-related funds like NASA and MISL.

NASA just debuted on March 30, 2026 and crossed $2.6 billion in assets within two months. It is the first pure-play space ETF to include direct SpaceX access through a special purpose vehicle, an unprecedented feature that has proven enormously appealing. But space-focused funds can face extreme volatility, and NASA's explosive growth is driven as much by IPO excitement as by investment fundamentals.

By contrast, MISL is a passive, lower-cost fund anchored in established U.S. aerospace and defense companies that have real revenues and long track records. For long-term investors who want aerospace exposure without betting on the outcome of a single IPO, MISL is the more sensible choice. Its holdings generate real revenue today, carry government contracts that provide predictable cash flows, and have survived multiple market cycles. NASA is the fund for investors specifically seeking pre-IPO SpaceX exposure who also understand they are buying into one of the most momentum-driven trades in recent ETF history.

Sara Appino has positions in Palantir Technologies. The Motley Fool has positions in and recommends AST SpaceMobile, Boeing, GE Aerospace, MDA Space, Palantir Technologies, and Rocket Lab. The Motley Fool has a disclosure policy.