South Korean asset managers are rushing to launch new exchange-traded fundstied to both established and emerging space technology companies, seeking to capture investor enthusiasm ahead ofSpaceX’s anticipated initial public offeringin June.

Analysts caution, though, that any rally after the listing may not fully lift the funds if their exposure to SpaceX is limited, while volatility could rise sharply. Some also warn that lofty valuations for several space-related stocks may leave less room for sharp gains.

Mirae Asset Global Investments Co. and Korea Investment Management Co. listed the TIGER US Space Tech and ACE US Space Tech Active ETFs, respectively, on Tuesday.

The funds rose more than 3.5% in their debut, drawing heavy retail buying.

Shinhan Asset Management Co. is also preparing to launch the SOL US Aerospace TOP10 ETF, while KB Asset Management Co. is developing a similar product.

The latest boom reflects expectations that a SpaceX listing could become a watershed moment for the broader space industry, which has lately gained momentum in the South Korean ETF market.  

The IPO is estimated at about $75 billion, more than double the $29.4 billion raised by Saudi Aramco in 2019, still the world’s largest listing.

DIFFERENT WAYS TO PLAY THE IPO

Mirae Asset’s TIGER US Space Tech is a concentrated passive ETF investing in 10 core space-related companies.

The fund is structured to allow SpaceX to account for as much as 25% of the portfolio through index rebalancing immediately after the IPO, potentially appealing to investors seeking exposure to any sharp gains early in the stock’s trading life.

Mirae Asset Group owns a stake in SpaceX after investing about $278 million in the company between 2022 and 2023.

Korea Investment Management’s ACE US Space Tech Active takes a different approach.

As an active ETF, it gives the portfolio manager more flexibility to adjust holdings with market conditions.

Before SpaceX lists, the fund plans to gain indirect exposure by holding companies such as Alphabet Inc. and Tesla Inc., both seen as linked to SpaceX through equity ownership.

The fund also excludes defense contractors, focusing instead on technology companies dedicated to space-related businesses.

Other issuers already in the market have taken broader approaches.

Samsung Asset Management Co.’s KODEX US Space & Aerospace, listed in March, spreads money across 20 stocks, including defense heavyweights such as Lockheed Martin Corp. and Northrop Grumman Corp.

Hana Asset Management Co.’s 1Q US Space Aerospace Tech, launched in November, casts the widest net, extending beyond space into future mobility themes such as Joby Aviation Inc. and other urban air mobility names.

Timefolio Asset Management has been running its TIME Global Space Tech & Defense Active fund since 2024, posting a one-year return of 58%.

An asset management industry official said SpaceX’s IPO could trigger a market reappraisal of the space industry, but added that investors need to be selective because portfolios vary widely in whether they include defense stocks and how concentrated their holdings are.

LIMITED EXPOSURE, HIGHER VOLATILITY

Analysts warn that SpaceX could prove highly volatile after listing and that ETF investors may not get as much direct exposure as the marketing suggests.

Industry officials expect much of the IPO allocation to go to institutional investors, leaving only a limited number of shares available for retail investors.

If the freely tradable portion is around 5% at the outset, as some in the market expect, ETFs may face limits in building meaningful positions.

That could leave passive funds lagging investor expectations, since their ability to add SpaceX will depend on index inclusion and rebalancing schedules.

Active funds may be able to move faster, but performance will depend heavily on managers’ judgment over timing and position size, analysts said.

A financial investment industry official said space ETFs offer a way to invest in a growth industry, but returns could vary sharply depending on portfolio construction and volatility.

Some analysts also note that several stocks held by newly launched space-related ETFs have already rallied sharply, potentially capping upside for new investors.

Rocket Lab Corp. shares, for example, have climbed more than 1,600% over the past three years.