By Philip van Doorn, MarketWatch
If you’re an investor who doesn’t want to miss out on the next big trend, you had better pay attention to what’s going on in space.
When people think about the space business, they may be excited that on Saturday the U.S. finally regained the ability to send people into orbit. That’s a matter of pride. NASA and SpaceX successfully launched two astronauts into Earth’s orbit Saturday at 3:22 p.m. ET. Elon Musk, CEO of electric-car maker Tesla /zigman2/quotes/203558040/composite TSLA -2.35% , also is CEO of SpaceX, which isn’t publicly traded.
More on the mission: SpaceX set to launch U.S. astronauts into space
Many investors don’t take space seriously, despite watching technological developments lead to incredible growth for so many companies, and their shareholders, over the past several decades.
Analysts at Morgan Stanley expect the space industry’s annual global revenue to exceed $1 trillion a year by 2040 , from the current estimate of about $350 billion.
The SPDR S&P Kensho Final Frontiers ETF /zigman2/quotes/207815390/composite ROKT +1.71% “seeks to cover all aspects of what space exploration can be,” according to Matthew Bartolini, the head of SPDR Americas research at State Street Global Advisors.
In addition to investing in companies that produce spacecraft, launch vehicles, rockets, satellites, infrastructure and mission-support services, the ETF also invests in companies involved with deep-sea exploration.
An explanation of ROKT’s passive strategy is below. Here’s a list of all 24 of the ETF’s holdings as of the market close May 28:
|Company||Ticker||Industry||Share of portfolio||Total return - 2020|
|Maxar Technologies Inc.||/zigman2/quotes/201591991/composite MAXR||Aerospace & Defense||7.0%||-6%|
|Raytheon Technologies Corp.||/zigman2/quotes/203237915/composite RTX||Aerospace & Defense||6.8%||-23%|
|Teledyne Technologies Inc.||/zigman2/quotes/203527738/composite TDY||Aerospace & Defense||6.1%||7%|
|Lockheed Martin Corp.||/zigman2/quotes/200691238/composite LMT||Aerospace & Defense||6.0%||3%|
|L3Harris Technologies Inc||/zigman2/quotes/201997607/composite LHX||Aerospace & Defense||5.7%||0%|
|Northrop Grumman Corp.||/zigman2/quotes/205518355/composite NOC||Aerospace & Defense||5.7%||0%|
|CACI International Inc Class A||/zigman2/quotes/205763384/composite CACI||Information Technology Services||5.5%||0%|
|Aerojet Rocketdyne Holdings Inc.||/zigman2/quotes/205342146/composite AJRD||Aerospace & Defense||5.2%||-4%|
|Mercury Systems Inc.||/zigman2/quotes/204481634/composite MRCY||Electronic Equipment/Instruments||5.1%||28%|
|Heico Corp.||/zigman2/quotes/207361354/composite HEI||Aerospace & Defense||4.8%||-9%|
|Ball Corp.||/zigman2/quotes/209031515/composite BLL||Containers/Packaging||4.4%||9%|
|BWX Technologies Inc.||/zigman2/quotes/200150322/composite BWXT||Electric Utilities||4.1%||3%|
|Analog Devices Inc.||/zigman2/quotes/201631938/composite ADI||Semiconductors||3.8%||-6%|
|Jacobs Engineering Group Inc.||/zigman2/quotes/209082472/composite J||Engineering & Construction||3.8%||-6%|
|Amphenol Corp. Class A||/zigman2/quotes/207999687/composite APH||Electronic Components||3.6%||-12%|
|General Dynamics Corp.||/zigman2/quotes/208560027/composite GD||Aerospace & Defense||3.3%||-15%|
|TransDigm Group Inc.||/zigman2/quotes/203902625/composite TDG||Aerospace & Defense||3.0%||-23%|
|ESCO Technologies Inc.||/zigman2/quotes/208880925/composite ESE||Aerospace & Defense||2.9%||-10%|
|TTM Technologies Inc.||/zigman2/quotes/210395673/composite TTMI||Electronic Components||2.6%||-23%|
|Hexcel Corp.||/zigman2/quotes/209574944/composite HXL||Aerospace & Defense||2.6%||-51%|
|Boeing Co.||/zigman2/quotes/208579720/composite BA||Aerospace & Defense||2.5%||-54%|
|Moog Inc. Class A||/zigman2/quotes/210100990/composite MOG.A||Aerospace & Defense||2.0%||-35%|
|TechnipFMC PLC||/zigman2/quotes/207530935/composite FTI||Oilfield Services/Equipment||1.6%||-63%|
|Standex International Corp.||/zigman2/quotes/205692259/composite SXI||Miscellaneous Manufacturing||1.0%||-29%|
|Ducommun Inc.||/zigman2/quotes/206978147/composite DCO||Aerospace & Defense||0.7%||-36%|
You can click on the tickers for more about each company.
Bartolini, in an interview, said some of the same technologies developed for deep-sea exploration will be used in asteroid mining and planetary exploration. He pointed to Department of Defense budgeting, where expects “specific carve-outs” for deep-sea exploration.
The SPDR S&P Kensho Final Frontiers ETF tracks the S&P Kensho Final Frontiers Index. Kensho was acquired by S&P Global Market Intelligence in 2018. Kensho created the natural-language algorithm that scans companies’ filings to identify which ones should be included in the index. The screening not only looks for key words, but also for their placement to make sure industry selections are appropriate.
State Street Global Advisors
Bartolini explained that after the screening, the index is “built by overweighting the core companies,” such as Boeing Co. /zigman2/quotes/208579720/composite BA +5.52% and Lockheed Martin Corp. /zigman2/quotes/200691238/composite LMT +0.94% , “which are very much involved in space exploration.” The index, and the ETF, place a lower weighting on what Bartolini calls “ancillary plays” such as Ball Corp. /zigman2/quotes/209031515/composite BLL -0.26% , which makes packages used for aeronautical food and beverages.