Key Points
- The Tema Space Innovators ETF, which debuted March 31 to capture space economy growth, has fallen 38% from its post-debut closing high.
- The fund's extreme volatility stems from concentrated, high-beta holdings like SpaceX, AST SpaceMobile, Rocket Lab, and Viasat, all of which remain unprofitable.
- Despite recent weakness, the space industry retains long-term structural growth drivers, strategic partnerships, and strong forecasted market expansion through 2035.
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With ETFs on track for another record year of inflows, asset managers have used 2026 as a launching pad for thousands of new funds. Of those products, hundreds have focused on thematic approaches to the equities market, with some experiencing tremendous success compared to others. But for one such ETF the jury’s still out.
The Tema Space Innovators ETF (NYSEARCA: NASA) debuted on March 31 and aims to provide investors with the high growth potential of the space economy, which is forecast to nearly triple from $630 billion in 2023 to $1.79 trillion by 2035. But its performance has yet to evidence that high growth potential, much of which can be attributed to highly volatile, pre-profit companies within its holdings.
The Space Economy’s Seemingly Infinite Upside—and Major Risks
According to Tema’s website, “space remains a theme in its early innings, with untapped potential in communications, defense, tourism, mining, data center infrastructure, and more.”
Industry consultancy firm Grand View Research’s data backs up that notion.
As a whole, the global space technology market is expected to undergo a compound annual growth rate (CAGR) 9.3% from 2024 to 2030.
At the same time, the global space launch services market is forecast to increase by a CAGR of 15.6% by the end of 2030, while the global space tourism market is poised for a CAGR of 41.5%.
Grand View Research highlights how the “market is experiencing a notable trend driven by technological advancements, an escalating demand for satellite deployment, and the burgeoning landscape of commercial space activities.”
But the industry is facing numerous headwinds, leaving its near- and medium-term outlook in a nebulous state. Specifically, burdensome capital expenditures (CapEx) tied to costly launch vehicles, satellite constellation buildouts, and R&D have translated to elevated burn rates, a heavy reliance on debt and capital raises, and—in many instances—unprofitability. Meanwhile, space companies are still grappling with launch mishaps and delays, persistent investor pressure, and volatility that can affect the entire supply chain.
Long-term structural drivers, including rapidly expanding launches, direct-to-device cellular connectivity networks, and government contracts, remain in place. But for the Tema Space Innovators ETF, the space economy’s high growth potential is anything but baked in. The fund is down 38% from its post-debut closing high on May 27.
A Basket of High-Growth, High-Risk Holdings
Unsurprisingly, NASA’s portfolio is anchored by Elon Musk’s SpaceX (NASDAQ: SPCX), which accounts for around 25% of the fund and carries a beta of 5.1, creating both concentration and volatility risk.
But SpaceX alone isn’t solely responsible for the ETF’s extreme volatility.
Several other high-beta holdings—AST SpaceMobile (NASDAQ: ASTS) at 2.72, Rocket Lab (NASDAQ: RKLB) at 2.93, and Viasat (NASDAQ: VSAT) at 1.76—have also contributed to NASA's beta of 3.82, making it 282% more volatile than the broad market.
Perhaps more importantly, each of those four space companies is currently unprofitable while operating capital-intensive businesses that require substantial ongoing investment.
SpaceX is perhaps the clearest example of this: the company went public at a $1.77 trillion valuation—marking the largest IPO in history—despite posting a net loss of nearly $5 billion in 2025.
For the others, profitability has been a focal point of recent and weak earnings reports. Rocket Lab has missed on earnings in five of the last six quarters, Viasat has missed in four of eight, and AST SpaceMobile has missed on earnings for six consecutive quarters while shareholders continue to face challenges related to share dilution and the potential fallout from a class-action lawsuit.
A Nascent Fund in a Nascent Industry Affords Time for Upside
Still, the space economy is in its infancy. Even if the industry doesn’t achieve Grand View Research’s lofty CAGR forecasts, the catalysts behind SpaceX’s IPO and the popularity of other space stocks are indicative of a trend in an early but real cycle.
As an actively managed fund with an expense ratio of 0.75%, NASA already has $1.21 billion in assets under management (AUM). The companies in its portfolio continue to benefit from strategic partnerships with well-established telecommunication services and infrastructure providers.
SpaceX has contracts with the U.S. government, an agreement with Alphabet (NASDAQ: GOOGL), a partnership with T-Mobile (NASDAQ: TMUS), and a technology collaboration with NVIDIA (NASDAQ: NVDA)
AST SpaceMobile is expanding its defense contract footprint while also having commercial pacts with AT&T (NYSE: T), Verizon (NYSE: VZ), Tokyo-based Rakuten (OTCMKTS: RKUNY), and real estate investment trustAmerican Tower (NYSE: AMT).
Rocket Lab has partnered with defense contractor RTX (NYSE: RTX) after being co-selected by the U.S. Space Force to demonstrate advanced missile tracking and interception hardware under defense programs, and Viasat provides in-flight connectivity services.
For patient investors with higher risk tolerances, the Tema Space Innovators ETF can provide broad exposure to the space economy. Just be prepared to endure g-force-level volatility along the way.
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