Our theme of Space Stocks – which includes U.S.-based established aerospace players, upstart space companies, and satellite communications firms – has underperformed this year, rising by just about 5% year-to-date, compared to the S&P 500 which remains up by almost 19% over the same period. While futuristic stocks, in general, have fared a bit better this year amid cooling inflation and the recent pause in interest rate hikes by the Federal Reserve, returns on the space theme have been dragged down by the aerospace and defense contractors who have seen interest cool after seeing a rally in 2022 following the Russian invasion of Ukraine.
That being said, the theme still remains promising for a couple of reasons. Firstly, private players are playing an increasing role in space exploration, partnering with government space programs. Commercial space activities are also growing, with new markets opening up. Satellite communications, for instance, appear to be going mainstream. Apple unveiled text-based satellite connectivity for emergency situations on its latest iPhone 14 devices last year, while T-Mobile US is working with SpaceX to connect a majority of the smartphones on T-Mobile’s network to SpaceX satellites. The frequency of satellite launches has also been on the rise, as satellites become more compact and more cost-effective, opening up new opportunities.
Within our theme, Iridium stock (NASDAQ:IRDM) has been the best performer, rising by about 14% year-to-date. The company operates the Iridium satellite constellation which is used for communication services. On the other side, Lockheed Martin stock (NYSE:LMT) has been the worst performer, with its stock down by about 6% year-to-date.
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|S&P 500 Return||2%||19%||103%|
|Trefis Multi-Strategy Portfolio||6%||26%||305%|
 Month-to-date and year-to-date as of 7/25/2023
 Cumulative total returns since the end of 2016