Investors are plowing assets into ex-U.S. equities, clamoring for ways to diversify away from U.S. equities. While a bit tongue in cheek, they could go even further: into space. The space economy presents a cross-section of software, robotics, aviation, AI, and more innovative segments. The segment is poised to exceed $1 trillion by 2034 according to data from Novaspace, so how might investors approach it?
See more: Report: Active ETFs Topped $2 Trillion in Global AUM in January
According to Novaspace, the global space economy hit $626.4 billion last year. Some important factors are helping to drive that 12% projected growth by 2034. While defense may be obvious, AI and robotics, too, will be key for human activity in the vacuum of space. That presents one intriguing way to add tech exposure outside of just AI hyperscaling.
Space Economy ETF UFO Could Prove an Interesting Play
ETFs like UFO, the Procure Space ETF, offer convenient exposure to the category. UFO charges a 75 basis point (bps) fee to track the S-Network Space Index. The index offers tier-weighted exposure to global firms in the above areas. Specifically, the space economy ETF targets satellite products, manufacturing, servicing, deployment, space hardware, ground equipment manufacturing, and space imagery and intelligence.
Its first tranche of firms includes non-diversified stocks deriving at least 50%, but often 100%, of revenues from space. The second tranche includes diversified companies playing a role in space tech and equipment production.
Together, that has helped the space economy ETF return 42.5% over the last three months per ETF Database data. It has more than doubled that performance when looking at an even longer period, twelve months. UFO returned 97.3% in that time period. The ETF outperformed the global equities category average on ETF Database as well, in both those periods, more than triple the return in the latter case.
With global geopolitical instability on the rise, and technology opening up the final frontier like never before, funds like UFO can play a role for investors. For those looking to add tech exposure in a different space than the usual software names, UFO may be one to watch.
For more news, information, and analysis visit the Thematic Investing Content Hub.
vettafi.com is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for UFO, for which it receives an index licensing fee. However, UFO is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of UFO.
Earn free CE credits and discover new strategies