Is iShares' ITA or Tema's NASA the Better Aerospace ETF?

The iShares U.S. Aerospace & Defense ETF (NYSEMKT:ITA) provides established industrial exposure at a lower cost, while the Tema Space Innovators ETF (NYSEMKT:NASA) targets high-growth, niche space-related innovation.

While both funds look toward the skies, they operate on vastly different orbits. The Tema fund focuses on the burgeoning "new space" economy, including satellite communications, orbital infrastructure, and propulsion. In contrast, the iShares fund tracks a market-cap-weighted index of domestic companies strictly within the more traditional aviation and defense sectors.

Snapshot (cost & size)

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

The iShares U.S. Aerospace & Defense ETF is the more affordable option for investors, featuring an expense ratio of 0.38% compared to the 0.75% charged by the Tema Space Innovators ETF.

Performance & risk comparison

What's inside

The iShares U.S. Aerospace & Defense ETF captures companies engaged in the manufacturing, sale, and service of military and commercial aircraft. It is exclusively concentrated in the industrials sector, which accounts for 100% of the portfolio. Its largest positions include GE Aerospace (NYSE:GE) at 22.29%, RTX Corp (NYSE:RTX) at 15.18%, and Boeing (NYSE:BA) at 9.08%. This fund was launched in 2006.

The Tema Space Innovators ETF takes a broader view of innovation, investing in businesses that derive significant revenue from the expanding space economy. This includes both pure-play firms and diversified aerospace providers advancing orbital systems and business models. Its largest positions include SpaceX (NASDAQ:SPCX) at 14.74%, Rocket Lab Corp (NASDAQ:RKLB) at 11.56%, and EchoStar Corp (NASDAQ:SATS) at 9.24%. Sector exposure breaks down to industrials at 43.18%, information technology at 19.55%, and communication services at 17.67%. The fund was launched in 2026.

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

What this means for investors

Deciding to invest in the iShares U.S. Aerospace & Defense ETF (ITA) or the Tema Space Innovators ETF (NASA) is a choice between opposite ends of the aerospace industry. Which to pick comes down to whether you prefer the conservative, established ITA or the high-risk, high-reward NASA.

ITA is the veteran ETF with twenty years of history to gauge its performance. It had a one-year return of 33% as of July 3. The fund’s price has risen due to increased defense spending by the U.S. government. Its advantages over NASA include a much higher AUM for superior liquidity, a modest dividend yielding 0.4%, and a significantly lower expense ratio. It boasts a bevy of well-known companies among its holdings, and is the ideal fund for cost-conscious, income-oriented investors.

NASA is the newcomer with just a few months under its belt since its inception on March 30. The fund’s price soared as high as $42.68 on May 26 as investors anticipated SpaceX’s IPO, but has since fallen substantially. This ETF is for investors who want exposure to the speculative space sector. It’s a way to gain shares in SpaceX at a fraction of buying the stock on its own, while also providing greater diversification. However, it’s a highly volatile fund at this early stage in its existence, and is not for the faint of heart.

Robert Izquierdo has positions in Boeing. The Motley Fool has positions in and recommends Boeing, GE Aerospace, RTX, and Rocket Lab. The Motley Fool has a disclosure policy.