How to invest in spaceflight.
Elon Musk brainchild Space X looks like the world’s best shot at commercializing spaceflight — what could be the next great frontier in investing. Alas, while Musk-touched companies like Tesla (TSLA) and PayPal Holdings (PYPL) are available for public consumption, Space X isn’t. But you can still invest in space. Several publicly traded companies, while not primarily space-focused, have growing roles in this budding industry. As well, a number of exchange-traded funds hold several of these companies, making them better-positioned than most funds to benefit from both government space applications, as well a potential explosion in commercial spaceflight.
iShares U.S. Aerospace & Defense ETF (ticker: ITA)
It should be no surprise that any ETF with the word “aerospace” in it is likely thick with space-related companies. Boeing Co. (BA), is responsible for the X-37 Orbital Test Vehicle (OTV) and is designing a Space Launch System designed to carry people and cargo into deep space. United Technologies Corp. (UTX) supports life control systems on Boeing’s CST-100 Commercial Crew Transportation Systems, but more notably, designs NASA’s space suits. In fact, each of ITA’s top 10 holdings — comprising nearly 60 percent of the fund, has some sort of space application.
Expenses: 0.44 percent, or $44 annually per $10,000 invested.
PowerShares Aerospace & Defense Portfolio (PPA)
PPA is another defense-heavy ETF whose top holdings — such as General Dynamics Corp. (GD) and Lockheed Martin Corp. (LMT) — have numerous connections to public or private space technology. However, it also holds companies like multinational conglomerate Honeywell International (HON), which builds and supports satellites, and was involved with a robotic spacecraft tasked with exploring a nearby asteroid, as well as Harris Corp. (HRS), whose technologies power space observation and satellite communications.
Expenses: 0.64 percent
SPDR S&P Aerospace & Defense ETF (XAR)
SPDR’s XAR uses a modified equal weight index that prevents huge weights like Boeing’s 10 percent in the ITA. Still, XAR holds 4 percent-plus holdings in many of the same ITA components. The fund’s top holding, Arconic (ARNC, 5 percent), isn’t an aerospace company, but the part of split-up Alcoa (AA) that produces advanced technologies such as 3D-printed parts for NASA’s Orion spacecraft that is destined for travel to Mars. Also noteworthy is Orbital ATK (OA, 4.1 percent), which produces commercial satellites and space components.
Expenses: 0.35 percent
iShares Edge MSCI Multifactor Industrials ETF (INDF)
Another particular type of fund that is rife with aerospace applications is the industrials ETF, which includes defense and aerospace companies, as well as other space-supporting businesses. For instance, iShares’ INDF boasts an 11 percent weighting in General Electric Co. (GE), whose roots go back to the very beginning of spaceflight with the rocket that powered the Vanguard 1. Today, GE’s work is more on the ground, testing jet engines with NASA and providing things like video processing technology for spacefaring. Boeing is the No. 2 holding at 7.4 percent. Other holdings like 3M Co. (MMM) and L3 Technologies (LLL) tether this fund to space.
Expenses: 0.35 percent
iShares Global Industrials ETF (EXI)
Because EXI is a “global” fund, it’s allowed to invest in U.S. and international companies, though global funds typically favor U.S. firms. It should be no surprise, then, that General Electric, MMM and Boeing are top holdings in the EXI. However, software from Germany’s Siemens (2.6 percent) will help power the James Webb Space Telescope Observatory, which will “operate 1.5 million kilometers above the earth.” And the Orion spacecraft will be powered by a European Service Module from France’s Airbus (1.2 percent). Those and other companies provide a little international exposure to spaceflight, albeit not as much as defense ETFs.
Expenses: 0.47 percent
PureFunds Drone Economy Strategy ETF (IFLY)
PureFunds’ Drone ETF is a much smaller, niche fund than the ones discussed so far, but because the drone industry currently is so defense-focused, this has the look and feel — and holdings — of a defense fund. That means significant holdings in the likes of Boeing, BAE Systems, Honeywell and L3 technologies. However, expect Aerovironment (AVAV) — IFLY’s top holding at 10 percent of the fund — see its share of spaceflight exposure rise thanks to its unmanned technologies and work with NASA. AVAV has already developed the Helios Prototype under a NASA program to test solar-powered flight at extreme altitudes, and teamed up with NASA on a traffic management flight demo.
Expenses: 0.75 percent
PowerShares S&P 500 Quality Portfolio (SPHQ)
The SPHQ — a smart-beta S&P 500 that utilizes various screens for financial health — is probably the broadest-based ETF that still has numerous tentacles in spaceflight. For one, it has significant weightings in the like of Boeing (4 percent), United Technologies (2.3 percent) and General Dynamics (1.3 percent). But the fund also holds a number of tech stocks — International Business Machines Corp. (IBM), whose Watson is at work streamlining aerospace research for NASA, and Texas Instruments (TXN), which provides transponder solutions, among others — that assist in the business of space.
Expenses: 0.29 percent
More from U.S. News
7 Things That Happened When Donald Trump Met With Tech Leaders
The 25 Best Blue-Chip Stocks to Buy for 2017
9 ETFs to Buy When the Market Tanks
7 ETFs That Allow You to Invest in Space originally appeared on usnews.com
