First Trust launches space economy ETF tracking $1.75 trillion sector

First Trust's new ETF gives investors diversified exposure to a space economy that now includes SpaceX's $1.75 trillion market capitalization.

First Trust Advisors launched an ETF tracking the Bloomberg Space Economy Index on Wednesday, giving investors a diversified way to bet on a sector that now includes SpaceX's $1.75 trillion market capitalization.

"The burgeoning space economy offers intriguing potential, but as with many other rapidly evolving industries, future winners and losers are still unknown," said Ryan Issakainen, senior vice president and ETF strategist at First Trust.

The First Trust Bloomberg Space Economy ETF (FSPC), listed on NYSE Arca, tracks an index that selects up to 50 companies across four categories defined by Bloomberg Intelligence: space domain awareness, launch and space transportation, satellites and communications, and space data and artificial intelligence. The index rebalances quarterly. First Trust managed about $359 billion in assets as of May 29.

The launch comes as the space economy enters a new phase of investor accessibility. SpaceX's record $85 billion initial public offering in June — the largest in history — briefly pushed its valuation past $2 trillion and drew Wall Street's attention to a sector long dominated by government contracts and a handful of private companies. But space stocks have struggled since the listing: the Tema Space Innovators ETF (NASA) fell 24% from the IPO through Tuesday, while the Roundhill Space & Technology ETF (MARS) dropped 20% and the VanEck Space ETF (WARP) declined 25%.

A benchmark built for a maturing market

The index methodology, developed by Bloomberg Index Services, aims to capture the full breadth of the commercial space ecosystem rather than just rocket launch companies. "As the space economy matures into a dynamic commercial marketplace, investors need benchmarks built on credible, data-driven methodologies," said Mike Pruzinsky, equity index product manager at Bloomberg Index Services.

The space economy has quietly become one of the most consequential infrastructure layers of the modern world, underpinning global navigation, weather forecasting, financial transactions, military communications and broadband connectivity. What was once the domain of a handful of national space programs has grown into a commercial and government ecosystem that supports trillions of dollars in economic activity.

The sector's public-market footprint expanded dramatically with SpaceX's June IPO. Elon Musk's company raised more than $85 billion — nearly triple Saudi Aramco's record 2019 listing — and began trading at a $1.75 trillion valuation. Its market value briefly exceeded Amazon's in the days that followed. But shares have since pulled back, closing below the $150 IPO price for the first time on Tuesday despite a wave of bullish analyst reports and the stock's inclusion in the Nasdaq 100 index.

The post-IPO volatility has not deterred competitors. Blue Origin, the rocket company founded by Amazon's Jeff Bezos, is nearing the end of a fundraising round that values it at $130 billion, according to the New York Times. Rocket Lab, another SpaceX rival, announced plans in late June to acquire Iridium Communications in a deal valuing the satellite connectivity provider at $8 billion. Morgan Stanley analysts said the acquisition would expand Rocket Lab's addressable market and give it a satellite services business adjacent to Starlink, which generates the majority of SpaceX's revenue and cash flows.

For investors, the new First Trust ETF offers a way to own the space economy without picking individual winners — a relevant consideration in a sector where Morgan Stanley analysts argue that "the greatest value creation in the space economy comes not from launch alone, but from owning differentiated space-based infrastructure and monetizing recurring, high-margin services built on top of it."

This article is for informational purposes only and does not constitute investment advice.