This New ETF Is Up Nearly 30% This Year -- the SpaceX IPO Is Only 1 Reason to Like It

The Tema Space Innovators ETF (NYSEMKT: NASA) has been an early winner of SpaceX's plans for an initial public offering (IPO); as of this writing, the exchange-traded fund (ETF) has climbed roughly 33% this year. It invested in SpaceX through a special-purpose vehicle (SPV) and may buy shares after it goes public.

As an exchange-traded fund (ETF), however, Tema's long-term success will depend on more than how SpaceX performs.

Image source: Getty Images.

How the ETF operates

Tema is a young ETF, with an inception date of March 30, 2026. It mainly holds publicly listed companies, but it also invested in SpaceX through the SPV mentioned earlier. Additionally, it could also invest in other pre-IPO opportunities in the future. It looks for companies with multiple ties to the space sector, including everything from space exploration to satellite technology.

Most of the holdings, 66%, are in the U.S., but this ETF also offers global space exposure; 11.6% of the companies in the holdings are from Canada, while 7.3% are from Japan. Going a bit further into how it invests, 52.4% of its holdings are classified as industrials, 19.3% as information technology, and 18.1% as communication services.

Tema Space's holdings outside of SpaceX

Some investors may like the idea of SpaceX in their portfolio in some form, but are trying to minimize risk. Tema Space Innovators could help achieve that goal, as SpaceX is only the ETF's fourth-largest holding. Its top three holdings as of June 5 are Rocket Lab (10.3% portfolio weight), EchoStar (7% portfolio weight), and MDA Space (6.9% portfolio weight).

That gives investors exposure to rocket launches through Rocket Lab, satellite communications through Echostar, and space exploration through MDA Space. As I write this, all three companies have performed exceptionally well over the last year; Rocket Lab shares have jumped 271%, Echostar shares have skyrocketed 627%, and MDA Space shares are up 80%.

The short-term risks and long-term picture

With the ETF's price climbing so high and so fast, it's one worthy of a cautious investment approach.

Although SpaceX isn't its only holding, a lot of the reason it has received so much attention is that it's holding the shares before the IPO. If excitement sharply fades after the SpaceX IPO, it could broadly negatively affect space stocks and ETFs like Tema.

Still, this is an ETF worth further investigation for long-term investors. Morgan Stanley researchers project that the global space industry will grow in value from $350 billion in 2016 to over $1 trillion by 2040. From companies launching rockets to those creating exploration equipment, its total holdings offer an investable piece of the growing space sector.

Jack Delaney has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends MDA Space and Rocket Lab. The Motley Fool has a disclosure policy.