Choosing the Better Space ETF: Tema's NASA Focused on Space Innovators or First Trust's MISL Targeting Aerospace and Defense

The First Trust Indxx Aerospace & Defense ETF (NYSEMKT:MISL) focuses on established industrial and defense giants, while the Tema Space Innovators ETF (NYSEMKT:NASA) targets high-growth space commercialization and innovation.

Both funds offer exposure to the final frontier, but they take different paths to reach it. While the First Trust fund tracks an index of domestic aerospace and defense companies, the Tema ETF uses an active management approach to find specialized companies that build the infrastructure for the modern space economy. These strategies may appeal to investors looking to capitalize on geopolitical trends and private-sector satellite expansion.

Snapshot (cost & size)

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

The First Trust fund is the more affordable option with a 0.6% expense ratio. The Tema fund charges 0.75%, reflecting the higher management costs associated with its active strategy. Over long time horizons, lower fees could help an investor retain a larger portion of their potential returns.

Performance & risk comparison

What's inside

The Tema Space Innovators ETF is an actively managed fund that targets the global space industry, including satellite manufacturing and launch services. It holds 37 securities. Its largest positions include Rocket Lab (NASDAQ:RKLB) at 9.89% and Space Exploration Technologies Corp (NASDAQ:SPCX) at 23.75%. It was launched in March of 2026.

The First Trust Indxx Aerospace & Defense ETF aims to mirror the financial performance of the Indxx US Aerospace & Defense Index. Its portfolio is concentrated in industrials at 81% and technology at 16%. It holds 49 securities in total. Its largest positions include Palantir Technologies (NASDAQ:PLTR) at 11.61%, RTX Corporation (NYSE:RTX) at 8.57%, and Space Exploration Technologies Corp at 7.67%. It was launched in 2022.

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

Which looks like the better buy

For investors seeking exposure to the up-and-coming space economy, the Tema Space Innovators ETF (NASA) and First Trust Indxx Aerospace & Defense ETF (MISL) provide that opportunity. Which fund to invest in depends on your appetite for risk.

NASA is a new fund, only a few months old, so it lacks the history to know how it has performed throughout various macroeconomic cycles. Its price soared to a 52-week high of $42.68 in May ahead of SpaceX's highly anticipated IPO, but has plunged in the aftermath. This fund is for those who want an ETF focused solely on space-based companies, and are willing to ride out the high volatility in exchange for the potential of outsized returns in the coming years as the space economy blossoms.

MISL is only a few years old, but at least it has more of a track record than NASA. MISL has delivered a one-year return of about 13%, and offers a dividend, which adds to your total return. It includes space stocks among its holdings, such as SpaceX, but it also includes veteran aerospace and defense companies that provide more stability.

MISL is for conservative income-oriented investors who want to participate in the space boom, but would prefer less volatility and a lower cost. The fund may not deliver the kind of return NASA could provide, but the trade-off is lower risk.

Robert Izquierdo has positions in Palantir Technologies and Space Exploration Technologies. The Motley Fool has positions in and recommends Palantir Technologies, RTX, and Rocket Lab. The Motley Fool has a disclosure policy.