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Access The Final Frontier With A New ETF

April 12, 2019 2:53 pm
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Access The Final Frontier With A New ETF

Space is often referred to as the final frontier. That frontier is accessible with a new exchange traded fund, the Procure Space ETF (NYSE:UFO), which debuted Thursday.

What Happened

The new ETF follows the S-Network Space Index. New York-based Procure, UFO's issuer, acknowledges that there is no legal definition for space, but that a generally “accepted definition is that the edge of space begins at the Kármán line, which is 100 kilometers (62 miles) above the Earth’s surface. This is approximately the point where there is not enough air to provide lift to a winged vehicle.”

The new ETF's underlying index holds companies hailing from multiple industries, but 80 percent of the index's components derive the majority of their revenue from space-related activities.

Why It's Important

Companies included in UFO are engaged in “satellite-based consumer products and services, rocket and satellite manufacturing, space technology hardware and space-based imagery and intelligence services,” according to Procurement.

Top 10 holdings in the new ETF include Iridium Communications Inc. (NASDAQ:IRDM), Viasat Inc. (NASDAQ:VSAT), Dish Network Inc. (NASDAQ:DISH) and Garmin Ltd. (NASDAQ:GRMN).

UFO allocates almost 59 percent of its weight to stocks from the communication services sector and over 20 percent of its weight to industrial names. The technology and consumer discretionary sectors combine for just over 20 percent of UFO's roster.

While UFO fits the bill as a thematic ETF, there are some compelling data points surrounding space investment. The creation of a U.S. Space Force is expected to stoke government spending on defense-related space applications, while space tourism is expected to emerge in the years ahead.

What's Next

“The industry is already valued at $384 billion, and estimates project that number to eclipse $1.1 trillion by 2040,” according to Procure. “Through UFO, investors can now potentially capitalize on this increasingly significant and transformational industry.”

UFO charges 0.75 percent per year, or $75 on a $10,000 investment.

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