You Can Do Better Than Rocket Labs With This 1 ETF

Rocket Lab is in excellent company. And yet, it’s not even the top-performing name in the JEDI ETF over the last 12 months. That distinction goes to Saab AB, a Swedish defense company that makes fighter jets and provides cybersecurity solutions for the military, among other products. Kratos Defense is also an interesting company that has outperformed Rocket Lab — it makes high-performance drones and satellite communications for space-based applications.

Palantir may be the best-known name among the company’s top holdings. The data analytics company makes powerful software that can tap into satellite data and hundreds of data points worldwide to provide military and intelligence clients with real-time data and insights. The company’s Artificial Intelligence Platform (AIP) and Foundry platform for commercial clients are also quickly growing in popularity.

Granted, some companies in the JEDI ETF have a much stronger military focus. Rocket Lab made 21 successful launches in 2025, and its customers include the U.S. Space Force, BlackSky Technology, Japan’s national space agency, and others — some of which are undisclosed.

Rocket Lab is also involved in NASA’s Escapade mission to Mars, which launched Nov. 13 — it supplied the spacecraft being transported by Blue Origin rockets to study the impact of solar wind on Mars’ atmosphere.

But it has plenty of military work as well, including an $816 million contract awarded in December by the U.S. Space Development Agency to build missile-tracking satellites. It also has a $515 million contract to build a satellite communications network to send data to the U.S. military. Rocket Lab is also expected to bid on the Department of Defense’s Golden Dome project, which would use ground-based and space-based missiles to intercept missiles.

President Donald Trump has said he wants to push the U.S. defense budget from $900 billion in 2026 to $1.5 trillion in 2027. Such spending is helping to fuel the massive profits in Rocket Lab and other stocks in the JEDI ETF.

While I’m always interested in high-flying stocks with great growth stories, I believe it’s a much better idea to invest in ETFs that accomplish the same goal while providing instant diversification. The Defiance Drone and Modern Warfare ETF, launched in September 2025, is an ideal vehicle for investors who like Rocket Lab. While the ETF’s expense ratio is a rather high 0.69%, or $69 per $10,000 invested annually, the fund is priced reasonably and the return compensates well in proportion to the fee.

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Patrick Sanders has positions in Palantir Technologies. The Motley Fool has positions in and recommends AeroVironment, Kratos Defense & Security Solutions, L3Harris Technologies, Leidos, Palantir Technologies, RTX, Rocket Lab, and Saab Ab (publ). The Motley Fool has a disclosure policy.

You Can Do Better Than Rocket Labs With This 1 ETF was originally published by The Motley Fool