Best ETFs That Hold SpaceX Stock After the IPO
It’s been about two weeks since Elon Musk’s Space Exploration Technologies (SPCX +0.13%) debuted in the largest initial public offering (IPO) on record.
As is the case with so many highly anticipated IPOs before it, the reusable rockets company has struggled out of the gate. Following a strong first two trading days, SpaceX is off 23.4% for the week ending June 24. Arguably, that underscores the case for using exchange-traded funds (ETFs) to own SpaceX stock. Using an ETF to access SpaceX helps with diversification, mitigating the extreme volatility typically associated with high-profile direct IPOs.
SpaceX stock is in a slew of ETFs. There are three viable options. Image source: Getty Images.
The universe of ETFs holding this stock is growing. As of June 24, nearly 110 ETFs held SpaceX shares, with 27 featuring the new stock among their top 15 holdings. There’s no shortage of candidates that could rank among the “best” ETF owners of this space equity.
I tried to pare down the landscape of solid SpaceX ETFs by employing some qualifiers, including at least $200 million in assets under management, eliminating dedicated space ETFs, and an emphasis on the ETFs not getting a lot of attention because, in the SpaceX ETF conversation, some funds are commanding significantly more focus than others.
Here are three to consider.
A broad market idea
Much has been made of index providers altering rules to swiftly include SpaceX in their gauges, while others didn’t follow suit. On that front, what’s done is done, but investors have some interesting options for accessing SpaceX broadly, including the Fidelity Nasdaq Composite Index ETF (ONEQ 0.50%).
This $10.9 billion fund is Fidelity’s first ETF, and a quick primer on it is instructive. This ETF tracks the Nasdaq Composite (^IXIC 0.24%), not the widely mentioned Nasdaq-100. Given that this fund has 1,033 holdings, it’s far broader than a Nasdaq-100-tracking fund. The Fidelity ETF also has some, albeit modest (3%), exposure to financial services stocks. Nasdaq-100 trackers don’t share that trait.
Fidelity Commonwealth Trust – Fidelity Nasdaq Composite Index ETF
Today’s Change
(-0.50%) $-0.50
Current Price
$99.38
Key Data Points
Day’s Range
$98.61 – $100.37
52wk Range
$79.00 – $107.07
Volume
227K
SpaceX isn’t a major holding in this ETF, accounting for only 2.5% of the portfolio. Still, this fund is appropriate for investors who want broad-based growth exposure while enjoying a SpaceX “appetizer.” Plus, the annual expense ratio of 0.21%, or $21 on a $10,000 stake, is fair.
A nifty ticker
Earlier this month, one of my Foolish colleagues did an excellent job explaining why, when sector ETFs open their doors to SpaceX, the stock will head to communication services funds. Still, Musk’s company has a prolific track record of sending rockets into orbit, which positions it as an aerospace and defense outfit as well.
The First Trust Indxx Aerospace & Defense ETF (MISL +0.85%) takes that view. This aptly tickered ETF is an aerospace and defense fund, but there’s more to the story. The $784 million ETF tracks the Indxx US Aerospace & Defense Index, which has the latitude to include space exploration companies.
Hence, SpaceX makes this ETF’s cut and size at that. As of June 23, the stock accounted for 7.4% of the First Trust ETF’s portfolio, making it the third-largest holding.
That’s a fairly large weight to SpaceX among industry ETFs that aren’t dedicated space funds. Still, some of that risk is potentially offset by the fund’s heftier allocations to “old school” aerospace and defense names.
First Trust Exchange-Traded Fund – First Trust Indxx Aerospace & Defense ETF
Today’s Change
(0.85%) $0.37
Current Price
$44.10
Key Data Points
Day’s Range
$43.59 – $44.56
52wk Range
$36.62 – $51.10
Volume
81.6K
Home to 40 stocks, the First Trust ETF charges 0.6% annually, or $60 on a $10,000 investment. That’s slightly above the category average.
Active angles
Ark Invest founder and CEO Cathie Wood is a longtime, vocal supporter of Musk, so it’s not surprising that she rapidly purchased shares in the SpaceX IPO, adding the stock to several of her firm’s ETFs. One of those funds is the Ark Autonomous Technology & Robotics ETF (ARKQ 0.19%).
As an actively managed fund, this $2.4 billion fund has some flexibility in the themes to which it allocates capital, one of which is reusable rockets. That makes SpaceX a logical inclusion in this ETF, and it’s a significant one, commanding a weight of 5.7%, or enough to make it the fourth-largest holding.
Ark ETF Trust – Ark Autonomous Technology & Robotics ETF
Today’s Change
(-0.19%) $-0.24
Current Price
$123.60
Key Data Points
Day’s Range
$122.08 – $125.25
52wk Range
$86.00 – $144.42
Volume
95.7K
This ETF holds some space and next-generation defense equities, and it’s up 45% over the past year. However, the fund, which features Tesla as its largest holding, is most appropriate for risk-tolerant market participants due to its emphasis on disruptive technology and themes. Investors should also account for this ETF’s active management, meaning the SpaceX weight they see today may differ tomorrow.
The Ark ETF charges 0.75% per year, or $75 on a $10,000 investment. That’s above average among active equity ETFs.
