By Paul R. La Monica, CNN Business
Average people may not yet be able to walk in space like Jeff Bezos. But the frenzy around exploring the Last Frontier doesn’t have to be foreign territory for the typical Earth-related investor.
Several publicly traded companies and exchange traded funds have gone into orbit, capitalizing on a growing fascination with space.
Bezos successfully took off and landed in a spacecraft made by his company Blue Origin on Tuesday, just nine days after fellow billionaire entrepreneur Richard Branson made his own high-profile space trip.
The Procure Space ETF, which debuted in 2019 and trades under the ticker UFO, owns Branson’s Virgin Galactic as its primary asset and has capitalized on the hype surrounding the billionaire space race. The UFO ETF is up 14% so far this year and over 40% in the last 12 months.
“There has certainly been more interest in the fund this year. A lot of people had placed bets ahead of Virgin’s launch last week, ”said Andrew Chanin, UFO fund manager and CEO of Procure.
Of course, UFO ETF does not own any Blue Origin or SpaceX shares, as both of these companies are private.
Chanin told CNN Business that the UFO ETF is passively managed, which means it is index based. In this case, it’s the S-Network Space Index, created by a company called Space Investment Services.
Chanin said index managers aren’t just looking for companies that aim to send wealthy tourists into space. The real money for space launches is likely to come from the increased use of satellites for communication and Internet services.
So while Virgin Galactic is a key holding in the fund, most of the ETF’s other major stocks have nothing to do with space travel.
Some of the biggest holdings are navigation and GPS leader Garmin, mobile mapping company Trimble, communications company Iridium, satellite maker Maxar, and satellite media companies DISH and Sirius XM. The ETF does not own either Bezos’ Amazon or Elon Musk’s Tesla.
“It would be absurd to call space companies Amazon or Tesla even if their founders are in the space business,” Chanin said.
Chanin noted that Bank of America estimated that space activity could represent a revenue opportunity of $ 2.7 trillion by 2045, and that half of those sales could come from broadband communications.
UFO ETF is not the only space equity fund
“The satellite industry is one of the most misunderstood parts of the space economy,” Chanin said, noting that satellite communications currently account for about a third of the nearly $ 425 billion in global revenue for the satellite. space industry.
“Looking at space and excluding communications would mean you don’t really represent the space economy,” he added.
However, Procure’s ETF Space has some competition. The S&P Kensho Final Frontiers SPDR ETF, which lags behind UFO’s performance in 2021 and over the past year, also owns Virgin Galactic.
But the ETF Final Frontiers is heavily oriented towards aerospace and defense contractors. Major holdings include several companies that generate large revenues from the Pentagon, such as L3Harris, Honeywell, Lockheed Martin, and Northrop Grumman.
Cathie Wood’s Ark Invest also launched a new Ark space exploration and innovation ETF earlier this year. However, this fund does not hold any Virgin Galactic shares.
Major holdings look like a mix of what is found in UFO and Final Frontiers funds, such as Trimble, Iridium, L3Harris, and Lockheed.
Interestingly, however, the space ETF Ark also owns shares of Amazon as well as Google’s owner Alphabet, which owns a stake in SpaceX, as well as non-space companies such as Netflix and tractor maker Deere. The Ark space ETF is down around 1% since its debut in March.
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