this SPDR S&P 500 ETF Trust (NYSEARCA:SPY) The full-year return in 2025 is 17.72% (including dividends). ETFs are called Procure Space ETF (NASDAQ: UFO) The return rate during the same period was 66.36%, more than three times that of SPY. I believe this ETF can repeat its performance in 2026, despite how well it has performed, as structural tailwinds will likely continue to push it higher.
After strong performances in 2023 and 2024, the S&P 500 is set for another blockbuster year in 2025. Many analysts thought a third consecutive year of double-digit gains was too unlikely, but the market ultimately proved them wrong. 2026 is also off to a good start for the S&P, although a correction is certainly overdue at this stage.
But can the market prove the bears wrong again? This is certainly possible, as the Fed is likely to continue cutting interest rates this year. Jerome Powell will step down in 2026 and be replaced by a Trump appointee. So that could lead to a looser environment for markets than expected, especially if the president is reluctant to let stocks fall anyway.
If something like this happens, I expect the UFO ETF to repeat its huge 2025 performance. But it’s not just monetary policy.
UFO tracking is one of the top space startups that was ignored by the market years ago but is now coming into focus. The space economy is growing faster than ever, and that growth will continue because it’s no longer just about government-funded NASA funding to satisfy curiosity. Companies are actually looking for profitable spaces.
McKinsey predicts that the space economy will reach $1.8 trillion by 2035. The number of annual orbital launches has surged from 102 in 2019 to 324 in 2025. In fact, there have been more than 1,250 launches in the 2020s, slightly more than the 1,233 launches during the height of the space race in the 1970s.
The ETF holds stocks that are among the fastest-growing stocks but are still small enough to deliver strong returns. Planet Labs (NYSE: PL) The largest shareholding ratio is 6.47%, followed by Rocket Lab (NASDAQ: RKLB)and AST SpaceMobile (NASDAQ: ASTS) is 5.35%.
In addition to the obvious market forces that could drive this ETF higher, I believe there are other factors that could be driving the explosive growth of all these space stocks.
SpaceX plans a $1.5 trillion IPO “sometime in 2026.” If we look at the betting odds, the market sees a 55% chance of this happening mid-year.
Once SpaceX goes public, it will become the benchmark for all aerospace stocks. Wall Street is willing to pay a triple-digit premium on expected earnings for an established, controversial electric car company, e.g. Tesla (NASDAQ: TSLA)thanks to Elon Musk and his commitment. I believe Wall Street will pay a truly ungodly premium for SpaceX, which may exceed the numbers you see Palantir (NASDAQ: PLTR).
This is the perfect catalyst for the UFO ETF to outperform in 2026.
Even if SpaceX doesn’t IPO and the stock market starts to stabilize this year, I wouldn’t say no to UFOs. The space economy is here to stay. While the government ignores agencies like NASA, it doesn’t ignore space at all.
You may have heard of the Golden Dome project, which President Donald Trump has been pushing. It involves spending approximately $831 billion over two decades. This estimate may prove to be conservative, but even half that amount would put significant pressure on the startups held by the Procure Space ETF. Government funding for defense is a super-sticky source of high-margin revenue. You can look back at Palantir and see how much the market loves companies that can attract Department of Defense funding.
In short, UFO is still a solid choice in my book.
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