From cutting-edge innovation to surging investor enthusiasm, the space economy is taking off. The S&P Kensho Space Index’s strong lead over the S&P 500 highlights rising investor confidence and bullish market sentiment.

The space index has added 51.99% over the past year and 22.26% year to date, significantly outpacing the broad market index, which has gained 12.69% and 7.07% over the same period, respectively. Increasing investor interest in the sector is mainly driven by rising demand for advanced defense systems and cybersecurity infrastructure.

Experts project the global space economy to nearly triple by 2035, reaching an estimated $1.8 trillion, according to Statista. The blend of space exploration, tourism and practical satellite applications offers a compelling case for investors.

Investment Opportunities in the Militarization of Space

Space is becoming integral to defense operations. As modern warfare evolves and with the rise of drones, it's increasingly likely that economies will expand their defense capabilities through the development of their own space-based arsenal. President Trump’s proposed $175 billion Golden Dome missile defense concept highlights this fact.

The United States is not the only one looking to increase investments in the militarization of space. In addition to the Golden Dome, according to CNBC, Europe’s “ReArm” initiative and NATO’s proposal to raise defense spending to 5% of GDP signal a new era of military investment, giving space budget a significant lift.

With global defense spending on the rise and investor appetite shifting toward stable, high-growth sectors, space-focused ETFs are gaining momentum.

Space Tourism Taking Flight

A rising interest among adventure seekers, the enthusiasm of high net worth Individuals for space travel and heightened investment in research and development by both governmental and private entities are the driving forces behind space tourism.

According to Grand View Research, the global tourism market is projected to reach $10.09 billion by 2030, expanding at a CAGR of 44.8% from 2024 to 2030.

Helping in Climate Control

Space technologies are taking on a pivotal role in climate control. With global investments increasingly prioritizing climate control, advancements in the broader space economy hold further promise.

Already integral to disaster warning and management, space technology's role is expected to expand significantly with improved climate disaster monitoring, resilient communication network access and optimized tracking through satellite positioning data.

ETFs to Explore

With growing interest in interstellar exploration and growing capital infusion in the space sector, increasing exposure to funds covering the space economy can be beneficial. Additionally, the shift in warfare technology resulting in the militarization of space, a trend already gaining momentum, could also increase investments in the space economy.

Although space ETFs carry higher volatility, they offer distinct long-term growth potential. Below, we highlight a few funds that investors can consider to gain increased exposure to the space economy.

Investors can consider ARK Space Exploration & Innovation ETF (ARKX Quick QuoteARKX - Free Report) , Spear Alpha ETF (SPRX Quick QuoteSPRX - Free Report) , Procure Space ETF (UFO Quick QuoteUFO - Free Report) and SPDR S&P Kensho Final Frontiers ETF (ROKT Quick QuoteROKT - Free Report) .

With a one-month average trading volume of 247,000 shares, ARKX is the most liquid option, ideal for active trading strategies. However, to fully benefit from the sector’s growth trajectory, a long-term investment approach is recommended.

ARKX has also gathered an asset base of $385.2 billion, the largest among the other options. Performance-wise, SPRX has outpaced other funds significantly, gaining 23.96% over the past month, with ARKX coming in second, adding 12.19% over the past month.

Regarding annual fees, ROKT is the cheapest option, charging 0.45%, which makes it more suitable for long-term investing.