The Invesco QQQ Trust (NASDAQ:QQQ | QQQ Price Prediction) has become the default setting for anyone who wants a piece of the Nasdaq’s biggest names. Over the past decade, a bet on the QQQ has paid off handsomely. The Nasdaq has trounced the S&P 500 and almost every other ETF in that period. Year-to-date, the QQQ is up a staggering 23% as AI-related names continue to climb.
Nevertheless, you should remember that the Nasdaq’s performance is not due to all the stocks in the index rising in parallel. Certain pockets in the tech sector have been doing far better than the rest. Focusing on them can get you more bang for your buck. After all, the rally has been showing no signs of stopping anytime soon.
We’ll be looking into one such ETF that has soared past even the QQQ this year, and it has the potential to go much higher.
The SPDR S&P Kensho Final Frontiers ETF (ROKT)
The SPDR S&P Kensho Final Frontiers ETF (NYSEARCA:ROKT) focuses on companies driving innovation in space exploration and deep-sea ventures. it gives you exposure to many that are considered the “final frontiers” of human exploration. The returns have been exceptional so far this year. Plus, it may accelerate in the coming years as the themes the ETF invests in are red hot.
ROKT tracks the S&P Kensho Final Frontiers Index using artificial intelligence and quantitative weighting methodology to identify companies whose products and services advance exploration of outer space and the deep sea.
ROKT ETF is up 42.32% year-to-date.
Why ROKT’s portfolio is primed to grow aggressively
The company is focusing mainly on the space and aerospace/defense sector. The biggest holding here is Rocket Lab (NASDAQ:RKLB) at 7.07%, followed by Planet Labs (NYSE:PL) at 6.72%, and Viasat (NASDAQ:VSAT) at 6.51%.
Two years ago, these same names were considered dead weight on a portfolio due to how capital-intensive the space industry was. Today, the capital-intensive factor hasn’t changed. What has changed is how much money is pouring into space from both private and government sources.
The potential profitability is now magnitudes higher because the number of satellites in orbit is growing faster than Moore’s Law.
Militaries worldwide are more interested in space than ever, and private companies are trying to make 5G satellite internet a reality with unmodified phones.
There’s plenty of room for growth as the global space economy can hit a $1.8 trillion valuation by 2035. If you look at orbital launches per year, it becomes clear why this space ETF can keep outperforming.
In 2019, there were just 102 orbital launches. In 2024, there were 259.
Deep-sea mining is another up-and-coming market that many are overlooking. ROKT focuses here, too.
ROKT can keep outperforming
I see ROKT stock as a great satellite holding (pun intended) if you wish to buy and hold. Unlike most tech ETFs that focus on AI, this is one that does not hold any Magnificent Seven stocks in its top 10 holdings. ROKT instead gives you concentrated exposure to core space and defense companies with some deep-sea exploration holdings.
Many of these companies have serious contracts with the government that will keep sales flowing even if the broader market gets tired of software companies. The space economy has just started blossoming.
I expect it to grow exponentially regardless of what happens to the broader tech sector. It is becoming an established fact that there is a new space race between the U.S. and China. Experts are telling the Senate that the U.S. may risk losing if it does not aggressively invest in space companies.
The government’s strategy so far has been to downsize NASA but keep more money flowing to space companies that the SPDR S&P Kensho Final Frontiers ETF holds, so shareholders here can win big.
You also get a small 0.54% dividend yield plus a cheap expense ratio of 0.45%, or $45 per $10,000 to sweeten the deal.
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