US-based thematic investment boutique ProcureAM is set to introduce Europe’s first ETF offering pure-play exposure to the space economy.
ProcureAM and HANetf have crewed up for Europe’s first space ETF launch
Launching 4 June on London Stock Exchange, the Procure Space UCITS ETF will be available in US dollar (YODA LN) and pound sterling (UFOP LN) share classes.
It is being brought to market in collaboration with London-based white-label ETF platform HANetf.
The fund will replicate the strategy behind the Nasdaq-listed Procure Space ETF (UFO US), the world’s first dedicated space ETF. UFO launched in April 2019 and currently houses $130 million in assets.
Commenting on the outlook for the space industry, Robert Tull, President of Procure Holdings, said: “Space infrastructure is enabling numerous technologies like cloud computing, 5G, the internet of things, blockchain, and beyond. The interest of highly successful entrepreneurs such as Elon Musk, Sir Richard Branson, and Jeff Bezos is a huge indicator of the potential growth in this sector.
“The commercialization of space, whether it’s launching satellites to help meet the growing demand for data transfer or to support GPS systems and weather forecasts, shows how the space economy is a part of peoples’ everyday lives and not just about space exploration.”
Hector McNeil, co-Founder and co-CEO at HANetf, added: “Satellite systems and technologies are a major growth market as the growth of Uber, Deliveroo, and others demonstrate. GPS is central to their success just as satellites are vital for providing higher bandwidth and coverage in broadband and telecoms.
“And, of course, space tourism and hospitality are coming closer to reality with would-be customers queuing to go boldly where no man has gone before.”
Methodology
The underlying reference benchmark is the S-Network Space Index which was created by strategy index specialists S-Network Global Indices in collaboration with space industry analyst Micah Walter-Range, former director of research and analysis for the Space Foundation.
The methodology selects developed-market companies with business operations linked to space industries such as satellite-based consumer products and services, rocket and satellite manufacturing, space technology hardware, and space-based imagery and intelligence services.
To be eligible for inclusion, firms must derive a minimum of 20% of their total revenues, or at least $500m annually, from space-related activities.
The index then sorts constituents into two tranches: “Non-diversified” companies that derive the majority of their revenues from space activities, and “Diversified” for the rest. The Non-diversified tranche accounts for 80% of the index’s total weight, while the Diversified tranche makes up the remaining 20%.
Constituents within each tranche are weighted according to the product of their float-adjusted market capitalization and the company’s space revenue percentage. Reconstitution occurs semi-annually with rebalancing carried out on a quarterly schedule.
As of 31 May, the index contained 31 constituents with just over three-quarters of the total weight allocated to stocks listed in the US and most of the remaining weight distributed amongst stocks from France and Japan at 10% each.
The index is strongly tilted towards the communication services and industrials sectors which account for weights of roughly 40% and 30%, respectively, while approximately one-fifth of the index is allocated to information technology stocks.
Notable positions included Orbcomm, Dish Network, Garmin, Trimble, and Eutelsat Communications which each accounted for weights between 5% and 7%.
The ETF will come with an expense ratio of 0.75%.