A rocket soaring up
Space Exploration Technologies Corp. — commonly known as SpaceX — has rocketed to public prominence and a valuation of $125 million, even as its actual ownership remains very much out of sight. Investor interest is keen. Only a select few entities have been able to acquire direct ownership stakes in the Elon Musk-founded company. Despite that, there are ways to acquire an indirect ownership interest, at least until there’s an initial public offering. Here are several options for investors interested in owning a slice of SpaceX.
A financial advisor can help you find indirect ways to invest in various private but profitable ventures.
Invest in Baillie Gifford Trusts
There are two Baille Gifford trusts that afford investors the opportunity to indirectly hold stakes in SpaceX. Founded and based out of Edinburg, Scotland, investment management firm Baillie Gifford holds shares in SpaceX and makes its Scottish Mortgage Investment Trust and its US Growth Trust available for indirect investments in its SpaceX holdings. The shares trade on the London Stock Exchange.
The first of these investment trusts, Scottish Mortgage Investment Trust, has a 0.8% exposure in SpaceX as part of its ticker symbol SMT. The second option from Baillie Gifford comes in the form of the Baillie Gifford US Growth Trust investment trust. The US Growth Trust investment portfolio is largely comprised of stock options for companies entrenched in technology and innovation such as Tesla and Shopify, and it includes a 1.6% exposure to SpaceX as part of its ticker symbol USA.
Purchase Google Stock
Boca Chica, Texas, where SpaceX rockets launch
Another possible indirect route for SpaceX investment exposure is purchasing stock in Google. Google put $900 million in investments toward SpaceX in 2015 in a joint venture with Boston-based financial services provider and fund company Fidelity. There is no evidence that either Fidelity or Google has sold its stake in SpaceX. Fidelity also participated in a 2020 investment round for SpaceX.
So, how does Google’s purchase of SpaceX shares affect would-be SpaceX investors? The answer is actually pretty simple. Investors who currently retain Google stock as part of their portfolio may already indirectly be investing in SpaceX and its capital growth. Bear in mind, though, that Google’s share of SpaceX’s total value is obviously less than it was nearly six years ago and the giant search engine’s owner, Alphabet, may sell that stake, too.
Venture Capital Funds
Venture capital funds also hold (or have held) stakes in SpaceX. These include Founders Fund, Gigafund and Valor Equity Partners.
Investing in venture capital funds can be a challenge for retail investors. Traditionally, venture capital has been the domain of investment banks and private wealth management firms, though there are individual high-net-worth investors who fund VC opportunities. Over the last few years, venture capital has become more accessible to the everyday investor through crowdfunding platforms.
Crowdfunding platforms offer an opportunity to pool your money with other investors to back startups. There are several advantages, both for startups and investors. On the startup side, crowdfunding platforms can make it easier to access venture capital. In a typical VC arrangement, startups have to pitch firms which can be a time-consuming and frustrating process. Crowdfunding eliminates that hurdle.
Other Potential Investments
Retail investors interested in getting an indirect stake in SpaceX may want to keep an eye on funds that invest in space exploration, aerospace and the military and which, thus, could become owners of Elon Musk’s company.
Direxion Daily Aerospace & Defense Bull 3X Shares is a leveraged fund designed for short-term investing. This fund’s goal is to provide triple the daily return of the Dow Jones U.S. Select Aerospace & Defense Index. Its potential for outsized profit is matched by its potential for outsized losses.
ARK Space Exploration & Innovation ETF invests in both domestic and foreign equity securities for the purpose of long-term growth of capital. As of mid-May 2021, it did not hold any shares of SpaceX.
iShares U.S. Aerospace & Defense ETF targets established defense and aerospace corporations and has a low turnover.
SPDR S&P Aerospace & Defense ETF focuses on new areas of national security importance, including space and newly created federal agency Space Force. Besides aerospace and the military, the fund holds investments in cybersecurity, drone development and companies that pursue similar extra-terrestrial operations.
SPDR S&P Kensho Final Frontiers ETF aims to earn profits by investing in deep sea and space exploration.
Procure ETF seeks profits that correspond to those of the S-Network Space Index, which tracks shares of companies in space-related businesses, including those using satellite technology.
The Bottom Line
Midnight rocket launch
There are several ways for investors to gain exposure to SpaceX and start making indirect investments in the space transportation company. Even though these investments are indeed indirect, they are certainly a preferable option to zero investments for those who don’t want to wait around for a SpaceX IPO date that hasn’t even been announced. The cherry on top is that the above-mentioned options give investors excellent exposure to other companies that are part of growing aerospace and space ventures.
Tips on Investing
Consider working with a financial advisor as you explore allocating part of your assets into space-related ventures. Finding a financial advisor doesn’t have to be hard. SmartAsset’s financial advisor match-up tool connects you with local financial advisors who have the credentials to help you improve. So, if you’re ready to change up your routine for the better, get started now.
The stock market can be volatile. While it’s important to watch it for patterns, you can take hands-on measures to guard your finances. For example, an asset allocation calculator can help you create and maintain a diversified portfolio that will help buffer your portfolio as the market goes through bullish and bearish phases.
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