ProcureAM Launches First Space ETF

Back in April, ProcureAM took one giant leap and launched the first ever space exchange-traded fund (ETF). It focuses on the often overlooked but growing space industry, which generated US$383.5 billion in 2017 alone. 

Called the Procure Space ETF (ARCA:UFO), the fund tracks 32 holdings and launched on April 11, 2019.

“The Bank of America (NYSE:BAC) has predicted that, by 2045, the space industry will be worth US$2.7 trillion. And many of those estimates are including the opinion that broadband internet will be a major driver for this growth in the broader space economy,” Andrew Chanin, CEO of ProcureAM, told the Investing News Network (INN).

According to Chanin, satellite technology will be central to this growth. With the growing trends of cloud computing, 5G, connected devices and big data, satellite technology will become increasingly important.

“The common thread between all of those technologies that I mentioned is data. In order to allow for this massive increase of data to be used and transmitted, satellites will be an imperative part in that supply chain,” he said.

Based off of the S-Network Space Index, 80 percent of the Procure Space ETF’s holdings derive over 50 percent of revenues from the space industry. The companies it invests in focus on areas including technology and hardware used for space, imagery and intelligence services designed for space and rocket and satellite operation and manufacturing.

For example, television company Dish Network (NASDAQ:DISH) was the fund’s largest holding as of Monday (June 24) with 4.9 percent weight. Dish Network owns Dish, a direct satellite provider that has a price to earnings ratio of 13.08 and has risen almost 11 percent in one month.

Among the ETF’s other top holdings are Intelstat (NYSE:I) at 4.89 percent, Sky Perfect (TYO:9412) at 4.87 percent and Garmin (NASDAQ:GRMN) at 4.79 percent. The company also holds Canada-listed company Maxar Technologies (TSX:MAXR), which has developed satellites for SpaceX. Maxar’s primary operations involve geospatial data and analytics in addition to robotics and satellite technology.

“SpaceX had launched three satellites on behalf of the Canadian government, (and) some of those (are) helping with the monitoring of various waters, either surrounding Canada or within Canada, as well as helping to monitor various areas for natural resource changes, developments and deposits. Those satellites that were launched were developed by Maxar,” said Chanin. The three satellites were launched on June 12, 2019, for the Canadian Space Agency.

A number of other industries aside from space and internet services apply satellite technology. According to consulting firm McKinsey, the oil and gas industry could stand to benefit from satellite technology. Here, satellites can apply infrared technology to monitor ground temperatures. This, in turn, can be used to analyze refinery activity.

Monitoring pollutants in the air is also possible through satellites, which can detect emissions that are being produced by these refineries.

Chanin further noted that mobile apps such as Lyft (NASDAQ:LYFT) and Uber (NYSE:UBER) are undeniably reliant on satellite technology. This is because they are dependent on GPS technology, which is powered by satellites.

“Many people use Google (NASDAQ:GOOG) Maps on a regular basis. All of that is also being powered by satellite and satellite imagery.”

The space industry has changed considerably throughout its history. According to the Space Foundation, 20 percent is run by government-related agencies and 80 percent is driven by the commercial side of the industry, Chanin explained. When the space industry began, it was almost 100 percent run by the government space agencies.

In Chanin’s opinion, the future of space development presents a number of transformational and innovative possibilities.

“There are some exciting areas that companies are working on today, like building permanent bases on the moon or 3D printing reusable rockets in space, which I think could certainly be very interesting for the broader space as we move forward,” he said.

Since its launch, the Procure Space ETF had increased by 5.72 percent to US$26.50 as of Monday at 4:10 p.m. EDT. The fund has net assets of US$7.23 million and 275,000 shares outstanding.

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Securities Disclosure: I, Dorothy Neufeld, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.