Two exchange-traded funds offering exposure to the space and aerospace value chain are drawing investor attention for their sharply different approaches: iShares U.S. Aerospace & Defense ETF and Tema Space Innovators ETF. The iShares fund emphasizes established U.S. aerospace and defense companies, while the Tema ETF targets more frontier-oriented space infrastructure themes, including areas that may involve private or less liquid holdings.
Key takeaways
- Cost and size advantage: iShares U.S. Aerospace & Defense ETF charges 0.38% in fees versus Tema’s 0.75%, and has $14.2 billion in assets under management versus Tema’s $2.3 billion.
- Different investment theses: ITA is built around established public aerospace and defense leaders; NASA-style exposure (Tema Space Innovators ETF) leans toward satellite communications, launch systems, and space-based data, including private or less liquid exposure.
- Risk profile diverges: iShares has a lower five-year historical maximum drawdown of (18.7%) compared with Tema’s (25.4%) measure cited for the comparison timeframe.
- Performance and maturity matter: Tema reported a 29.7% one-year return as of June 19, 2026 versus 33.7% for iShares, with iShares also having a substantially longer operating history.
- Concentration is a key consideration: iShares has 49 holdings, but its top positions are concentrated; the top three alone account for nearly half the portfolio.
What’s behind the fee and structure differences
Expense ratios are often a direct driver of long-term ETF returns, particularly when investors plan to hold exposure for multiple years. Data provided in the comparison shows iShares U.S. Aerospace & Defense ETF carries a 0.38% expense ratio—about half the 0.75% fee charged by Tema Space Innovators ETF. For investors looking for broad, liquid exposure to a familiar set of aerospace and defense businesses, the lower fee can help reduce drag relative to the more specialized thematic approach.
Market structure also differs. The iShares fund is designed as a traditional index-tracking vehicle centered on established U.S. aviation and defense companies. Tema’s ETF, by contrast, launched recently and seeks exposure to parts of the space economy that may be further from today’s public-market earnings cycle, including select private holdings and depositary receipts tied to satellite systems and propulsion technology.
Holdings and concentration: established leaders vs. frontier exposure
The iShares portfolio described in the report is a concentrated basket of large-cap aerospace and defense names. It holds 49 positions, with the largest weights including GE Aerospace at 21.49%, RTX at 14.6%, and Boeing at 9.28%. The fund’s stated focus is a “pure play” on domestic defense and commercial aviation infrastructure, emphasizing companies that are already established leaders in the sector.
Tema’s portfolio, according to the same comparison, is newer and includes larger weights in frontier-leaning or less traditional exposure, including “SpaceX Spv Exposure” at 10.6%, EchoStar at 9.83%, and Rocket Lab USA at 9.68%. The ETF does not pay a dividend in the comparison provided, and it is described as holding a variable number of securities across multiple geographies and market capitalizations—reflecting the fund’s attempt to capture innovation in areas such as satellite communications, launch systems, and space-based data.
Concentration risk is a practical point for both funds, but it is especially relevant for iShares given the weightings highlighted. The comparison notes that the top three positions account for nearly half of the portfolio, and the top 10 make up about three-quarters, which can increase sensitivity to performance swings in a handful of large names.
How performance and drawdown compare
On a one-year basis, the figures cited in the comparison show both ETFs have delivered strong total returns as of June 19, 2026: Tema reported a 29.7% one-year return, while iShares posted 33.7%. The difference in fee levels may matter for an investor evaluating which structure best fits a longer holding period, assuming performance remains broadly comparable over time.
The comparison also highlights a risk metric. Using a five-year maximum drawdown measure, iShares is cited at (18.7%) versus (25.4%) for the Tema fund in the same comparative table. While drawdown does not fully describe volatility or the sources of downside, it suggests the iShares strategy—anchored in more established public-company exposure—has experienced less severe peak-to-trough declines over the cited window.
What investors should watch next
Investors comparing these two ETFs are effectively choosing between two different ways to express exposure to the aerospace and space buildout. iShares U.S. Aerospace & Defense ETF may appeal to investors seeking lower fees, a longer track record, and public-market exposure to major aerospace and defense incumbents. Tema Space Innovators ETF may be more suitable for investors willing to accept higher thematic and structural uncertainty tied to frontier space infrastructure and private or less liquid components.
For both funds, near-term direction is likely to remain sensitive to developments across the broader space supply chain—program updates, launch cadence, satellite demand signals, and defense procurement sentiment—as well as macro conditions that influence longer-duration equities, including interest-rate expectations.
