2025 was sprinkled with hints that a thematic exchange-traded fund (ETF) comeback could be in its initial stages. With over $240 million in assets under management (AUM) and growing, the Procure Space ETF (UFO) could be one of those funds to watch in 2026.
With large cap growth companies showing signs of frothy valuations, investors could be looking elsewhere to add that extra shot of growth. Thematic ETFs can do just, focusing on niche sectors that may not get the fanfare on financial news sites.
Thematic funds are typically used as a satellite allocation in a portfolio that would complement traditional growth exposure. These funds meld the opportunity for financial gain with topical themes that cater to investor interests. Assets into thematic ETFs have been on an uptrend last year, which could persist this year. Morningstar also noted a rise in technology-focused, thematic ETF demand last year with strong inflows, bucking a three-year trend of outflows.
Speaking of satellite allocations, UFO seeks investment results that track the S-Network Space Index. The Index includes companies that operate within the space economy such as manufacturers and developers. It also includes those that derive their revenue from utilizing space technology. SiriusXM Holdings and Garmin, for example, are two companies in the fund’s holdings (as of 1/13/26) fitting that ilk—in this instance, satellite technology for music streaming and GPS technology, respectively.
Out-Of-This-World Performance
UFO is coming off a strong 2025 that saw the ETF gain close to 70%. Like the rest of the market, it dipped during the “Liberation Day” sell-off before soaring to a peak in mid-October. It pulled back just before the Thanksgiving holiday, but took off again to end the year on a positive note.
UFO data by YCharts
As a basis of comparison to see how UFO stacks up against diversified, broad-based thematic ETFs, consider the iShares U.S. Thematic Rotation Active ETF (THRO) and Strategas Macro Thematic Opportunities ETF (SAMT). UFO easily outperformed this active ETF duo, proving that passive funds can certainly thrive in an ETF market where active demand is generating much of the buzz. It also shows that concentrated exposure in specific sectors can be strong performers if investors or advisors know where to look. That said, the space industry could be one of those sectors to watch in 2026.
UFO data by YCharts
With the aforementioned tailwinds of growing thematic ETF interest and a space industry that’s primed for growth, it will be interesting to see where UFO takes investors this year.
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Originally published on ETF Trends
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VettaFi LLC (“VettaFi”) is the index provider for UFO, which it receives an index licensing fee. However, UFO is not issued, sponsored, endorsed or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of UFO.
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