Investors keen to join the race to space didn't sit on their hands waiting for the SpaceX IPO, which happened on 12 June. They had already strapped in for the journey by snapping up other space stocks and funds in recent months.
Space-related investments feature heavily in the most popular purchases on the AJ Bell DIY investor platform over the past three months.
Scottish Mortgage Investment Trust is the most popular space-related name with AJ Bell customers, offering investors a way to get exposure to SpaceX before it joins the stock market. The investment trust’s share price has already gone bananas as investors took the view its long-standing stake in SpaceX will be worth a lot more once Elon Musk’s business is listed.
Seraphim Space Investment Trust and VanEck Space Innovators ETF are also among the most popular with AJ Bell investors from a diverse list of names either directly involved in space or providing adjacent services.
Leapfrogging blue chip stocks
More people bought shares in Scottish Mortgage, Seraphim or the VanEck Space ETF during the past three months than blue chip stocks Shell, BP, AstraZeneca and National Grid, all of which regularly feature in the most popular names with UK investors.
That’s remarkable as these names are stalwarts of ISAs and pensions across the country, with investors often buying shares in them every month for their attractive dividends and long history of generating solid earnings.
These UK blue chips are still popular but being surpassed by space-related names in terms of ‘buy’ orders over the past three months illustrates how more investors are getting swept up with the thought of their portfolio going to the moon.
A strong narrative can be a powerful draw for investors looking to generate returns, and the space story is generating significant excitement.
While SpaceX has hogged the limelight, investors have keenly sought other ways to play the theme in recognition that the space economy is evolving fast.
Space collectives
Seraphim Space Investment Trust’s share price has gone up by 59% year-to-date. Its biggest holding is ICEYE which is building satellite-based information services, with the aim of providing access to near-real-time imagery from space. That could help to monitor natural catastrophes and hazards such as flooding, wildfires and earthquakes. Climate change is having a profound impact on Earth and having an eye in the sky could bring significant capabilities in helping to save millions of lives.
London-listed investment group Molten Ventures also has a stake in ICEYE, which now has decacorn status. That’s a term to describe a privately held company with a valuation above $10 billion.
VanEck Space Innovators ETF provides exposure to 25 companies involved across space-related activities. Its stock market code is JEDI, which might put a smile on the face of Star Wars fans, but is also apt as the ETF features companies battling it out for dominance in the space race.
The VanEck ETF’s holdings include Rocket Lab, AST SpaceMobile and Planet Labs – all of which have been space favourites with AJ Bell DIY investors over the past three months as individual stocks.
Rocket Lab calls itself an ‘end-to-end space company’, delivering launch services, space-related manufacturing, satellite components and flight software. It’s a major rival to SpaceX. AST SpaceMobile is a satellite designer and manufacturer, while Planet Labs is an imaging specialist.
Pros and cons of holding space funds
Not all space investments will succeed, so it makes sense that investors might be looking for diversified exposure, particularly as the space economy is still in its relative infancy. Not betting the house on one stock should, in theory, mean an investor can afford one or two setbacks in a diversified portfolio of space investments.
Holding a fund is an even easier way to get broad exposure than buying different shares but comes with the downside of having notable success by one or two holdings diluted by the rest.
Expect to see more space-related funds launch over the coming months as the investment industry has form in pouncing on the latest craze with thematic ETF launches.
We saw it most recently when defence stocks were in vogue, and already this week we’ve had the launch of iShares Space Technologies ETF. It invests in companies with interests in either space equipment, aerospace or drones such as Rocket Lab, defence-to-telecoms specialist Thales and space solutions group RTX (previously called Raytheon).
Dan Coatsworth: Head of Markets
Dan Coatsworth is AJ Bell's Head of Markets. Dan has been with the company since December 2012 and has more than 18 years' experience in the industry, following the markets and all things investing. He...
