Events this week in the ever-growing space industry are providing a salutary lesson in the patience and equanimity needed when investing in themes or sectors – and investing in general too.
Although there has been a spate of exciting news for various space-focused companies, including Elon Musk’s SpaceX and Jeff Bezos’s Blue Origin this week, the exchange-traded funds (ETFs) following the sector have not necessarily seen the spike that individual shares might provide.
This could make it less of the wild and volatile ride that has brought a new generation into the world of investing, such as seen with GameStop and Bitcoin.
The celebrated tech backer Cathie Wood’s ARK fund focused on the space sector has today even fallen to its lowest point since launch.
How could this be, in a week when Musk’s SpaceX started us off by launching another 60 of its Starlink satellites and revealing it has notched up half a million customers for the satellite internet service and then last night its Starship SN15 rocket successfully stuck its first landing after a high-altitude test flight – a huge tick in the box for the company as this model of spacecraft is intended to take passengers to the Moon, Mars and beyond.
We also saw Jeff Bezos’s Blue Origin start selling its first tickets for sub-orbital sightseeing tours later this year, ramping up the battle for the space tourism market, with SpaceX also due to take passengers this year, with Richard Branson’s Virgin Galactic not expected to begin flying paying customers until next year because of recent issues in test flights.
But despite the excitement among investors and all over social media, the ARK Space Exploration & Innovation ETF (BATS:ARKX) fell almost 1%, going below $20 in early trading, its lowest point since it was launched at the end of March.
But with top 10 holdings that include Chinese ecommerce site JD.com and a near 6% stake in another ARK ETF focused on 3D printing, this ETF is perhaps not the ideal gauge of the space sector.
The fact that SpaceX and Blue Origin, two of the most exciting companies in the sector, are private, admittedly does make it hard for the ETF to get access and reflect the improving mood.
But another ETF that might argue it does the job better, as it tracks an independently managed index that is designed to be an impartial and transparent measure of equities across the wider space industry (but also therefore excludes Spacex and Blue Origin), is the Procure Space ETF (NASDAQ:UFO).
It has opened 0.2% higher at $29.20, and is up 2% since the end of March (and 16% since the start of the year).
This shows that while thematic investing offers a more concentrated portfolio than wider-market tracker funds, it does not bring the same volatility that some investors crave.
“Patience you must have,” as Jedi (and investing) master Yoda says, among the many of his nuggets of wisdom that are appropriate for investors of all levels of experience (but maybe that’s another article in itself…).