With space exploration and off-world technology creating headlines every day, you can bet there are people looking to make profits in this new field. Investors don’t need to invent an elevator to the moon, they can sit in the comfort of their own homes and hit a few computer keys to get involved in the economics of space. How? Due to a relatively new space exchange-traded fund (ETF).
The Procure Space ETF, also called “UFO,” was launched in April.
An exchange-traded fund is a collection of stocks, bonds, or commodities that trade on a stock exchange. The UFO fund focuses entirely on space, investing in businesses across the cosmos. The fund includes firms that generate revenues from things like satellite technology. The ETF has holdings in a mix of common names (AT&T, Boeing, Comcast, and Sirius XM) and not so well-known businesses (Globalstar, Trimble, and Maxar Technologies).
Investors might avoid the ETF for two reasons. They may see it is a marketing gimmick because it has the word “space” in the name, or that it is another aerospace and defense investment. However, companies in these sectors account for small percentages of the ETF.
So, how has the ETF been performing over the last seven months?
Since its debut, UFO has returned 5.6%, trading as high as $26.47 per share. So, if an investor purchased $1,000 in shares in April, they would have made $56. However, investors may dismiss it because of a high expense ratio (the total percentage of fund assets used for administrative, advertising, management, and other expenses in a year) of 0.75%.
Global Space Industry
The global space industry is predicted to be valued at nearly $3 trillion within the next 25 years, up from the present-day value of $400 billion. Many people would expect that space tourism and hotels would be the major money makers for the industry, but that is not the case. The launching of satellites and the decline in costs to send these instruments into space is driving revenues. Satellite communications technology is advancing and will play a huge role in two things: data creation and 5G internet.
It might not be as exciting as science-fiction novels or comic books – traveling at warp speed through wormholes – but who knows? Perhaps investors will be able to grab a seat on the first sightseeing trip to the moon or a luxury suite in space.