Space investors need more than Richard Branson's trip to boost ETFs

 It's likely to be a busy year for space developments, as Amazon.com founder Jeff Bezos prepares for a space trip next week in a Blue Origin rocket

The run-up to Richard Branson’s voyage to the edge of space may have super-cha­rged shares of Virgin Galactic Holdings but funds following the sector are clearly looking elsewhere for inspiration. Exchange-traded funds tracking the space industry have faced net outflows for the past two months in a row, according to the data compiled by Bloomberg. Even Cathie Wood’s highly anticipated ARK Space Exploration & Innovation ETF (ARKX) has been met with tepid interest after an initial burst of activity after its debut.
Despite the news storm around Branson’s test flight into space, which successfully took off this weekend, the $6.5 trillion industry’s products are more of a mixed picture. Performance — especially for those funds not heavily exposed to Virgin Galactic’s more than 75 per cent rally this year — is nothing special. And with hundreds of other ETF options out there to choose from, investors are making more down-to-Earth bets. Shares of Virgin Galactic even tumbled on Tuesdat after the company, piggybacking on the surge of attention, said it may offer as much as $500 million in stock.
“In a way investors are viewing this as more of an initial foray into a new paradigm,” said Eric Freedman, CIO at US Bank Asset Management Group. “People are probably a little bit less focused on it investment-wise because we’re not close to being at scale yet.”

Expectations for the new ARKX fund were high earlier in the year, with the announcement of Wood’s planned launch even lifiting the entire space industry. Although the product already has more than $600 million in assets, a top debut for a 2021 product, it has suffered outflows the past two months.
Part of that is probably due to performance as the fund is up only about 3 per cent since its launch in late March, compared to a 10 per cent rise for the S&P 500 during that time frame. Wood also decided to eliminate her stake in Virgin Galactic as of late May — missing an 68 per cent rally since then.