The Procure Space ETF (UFO) that launched on Thursday scores some points with its memorable ticker symbol. Ultimately, it hopes to score points with investors by delivering memorable results with its portfolio of companies involved in space-related industries.
This is the first ETF from ProcureAM, an outfit co-founded by ETF veterans Robert Tull and Andrew Chanin. Tull has helped build and launch more than 400 ETFs during the past quarter century, while Chanin helped create the PureFunds suite of ETFs that ultimately were taken over by ETF Managers Group in controversial fashion two years ago.
The UFO fund’s underlying S-Network Space Index comprises firms involved with satellite-based consumer products and services, rocket and satellite manufacturing, space technology hardware, and space-based imagery and intelligence services.
The index provider assesses whether a company is engaged in one or more of these segments based on mention of space-related business in a company’s annual filings. In addition, a firm’s space-related revenue must comprise either a minimum of 20 percent of its total annual revenue or more than $500 million in annual revenue.
The modified market cap-weighted index contains 30 holdings, and the largest sectors by weight are communications services (59 percent), industrials (20 percent) and information technology (15 percent).
The U.S. is the largest country weight at nearly 70 percent. Holdings run the gamut from satellite communications company Iridium Communications Inc. and space technology specialist Maxar Technologies Ltd. to AT&T Inc. and Boeing Co.
Morgan Stanley predicts the global space industry could grow to $1.1 trillion by 2040. Beyond the sectors included in the UFO fund, other emerging space industries include space tourism, space resource exploration, and space colonization and infrastructure. Space colonization might be a little futuristic, but the point is that space is becoming the next frontier of economic development.
What Is Space?
According to the UFO fund's prospectus, “space” is commonly defined as the edge of space beginning at the Kármán Line that’s 62 miles above Earth’s surface. While that’s scientifically interesting, it evidently has financial implications, too.
“It took us 180 percent longer than the average time period to get this fund approved because we had to explain what space was to the SEC for almost six months,” Tull says, adding that he and Chanin were adamant in keeping the word “space” in the product’s name.