Why the Space Industry is Attracting Smart Investors — And What ETF Could Be Your Entry Point

The Space Economy: A $1.8 Trillion Opportunity on the Horizon

The space sector isn’t science fiction anymore — it’s becoming a serious investment playground. According to McKinsey analysis, the global space economy will expand dramatically from approximately $630 billion in 2023 to roughly $1.8 trillion by 2035. That’s nearly triple in size within just over a decade.

This explosive growth spans multiple domains: satellite networks enabling global connectivity, advanced positioning and navigation systems, GPS technology powering countless applications, and broadcasting infrastructure. The opportunities are vast, and traditional investors are taking notice.

The ARKX ETF: A Diversified Play on Space Innovation

For investors looking to gain exposure to this booming sector without picking individual stocks, Ark Space Exploration & Innovation ETF (NASDAQ: ARKX) offers a compelling option. This actively managed fund, created by ARK Invest, specifically targets companies engaged in space exploration, orbital aerospace, sub-orbital activities, and enabling technologies.

The fund’s investment thesis is straightforward: it backs any company that enables, leads, or benefits from products and services operating beyond Earth’s surface — from satellite manufacturers to agricultural technologies powered by satellite data, to internet access providers and construction firms using space-based imaging.

Currently managing about $448 million in assets, the ARKX holds 25 different stocks, with its top 10 holdings representing approximately 64% of the portfolio’s weight.

Inside the Fund: Key Holdings and Market Positioning

The largest positions reveal the fund’s diversification strategy:

Kratos Defense & Security Solutions (NASDAQ: KTOS) — A defense contractor specializing in satellite and drone technologies — represents 10.3% of holdings. Rocket Lab (NASDAQ: RKLB), focused on rocket launch systems and controls, comprises 8.6%. AeroVironment (NASDAQ: AVAV), another defense player centered on autonomous drone systems, holds 8.5%.

Beyond defense, L3Harris Technologies (NYSE: LHX) — a major supplier of NASA rocket engines and advanced communications systems — accounts for 7.2%. Teradyne (NASDAQ: TER), providing automated testing equipment, rounds out the top tier at 6.4%.

This mix balances hardware providers, technology enablers, and infrastructure players, reducing single-company risk while maintaining concentrated exposure to high-conviction themes.

Performance Tells a Compelling Story

Since its March 2021 launch, ARKX has delivered roughly 33% total returns. But the recent trajectory is far more impressive: up approximately 52% over the past 12 months and 38% year-to-date. By contrast, the S&P 500 index gained 13.3% over the past year and 13.5% in 2025.

This outperformance reflects growing investor enthusiasm for space-adjacent technologies and the accelerating adoption of satellite-based services.

Why This Works: The Tailwinds Behind Space Tech

Several structural factors support continued growth. Satellite connectivity is expanding globally, mobile devices increasingly rely on positioning and navigation technologies, and AI-powered applications are driving demand for space-based data and imaging services. The competitive landscape remains fragmented, with many companies overlapping in their offerings — another reason why holding a diversified basket of 25 stocks makes more sense than betting on any single player.

The 0.75% expense ratio is slightly elevated for ETFs, but the recent performance suggests the active management adds value.

The Catch: Competition and Concentration Risk

No investment comes without caveats. The space industry is intensifying competition, with firms competing across overlapping technology domains. Additionally, the top 10 holdings represent roughly two-thirds of the fund, introducing some concentration risk despite the broader 25-stock composition.

Should You Consider Putting $1,000 Into ARKX?

If you have $1,000 available — money not earmarked for emergencies, debt repayment, or monthly obligations — this ETF warrants serious consideration. The fund offers a simplified entry into a high-growth sector without requiring deep due diligence on individual companies.

The space economy’s structural growth drivers remain intact, and a diversified approach through ARKX captures multiple winners across the value chain. Just ensure any investment aligns with your broader portfolio strategy and risk tolerance.