The thematic ETF landscape is often criticized for flash-in-the-pan products that shutter before their targeted themes reach maturity. However, the Procure Space ETF (UFO) has defied this trend, demonstrating significant longevity since its 2019 debut. During a recent appearance on ETF Prime, Andrew Chanin, CEO of ProcureAM, discussed the firm’s early conviction in the space economy long before the current wave of “Johnny-come-lately” competitors arrived.
Key Takeaways
- ProcureAM maintained conviction in the space theme for over seven years, even as assets fluctuated from $140 million down to $30 million before the recent surge.
- The ETF’s index methodology is changing on May 15th, introducing a mega-cap IPO rule to fast-track companies like SpaceX.
- Market interest is shifting from speculative SPACs to pure-play companies focused on reusable rockets and the militarization of space.
The Procure Space ETF: A Seven-Year “Overnight Success”
UFO has recently seen its assets under management skyrocket from $50 million to over $800 million in just one year. However, Chanin noted that this was no accident. He emphasized that ProcureAM stuck with the strategy through significant volatility and “naysayers” from major research houses. “We really saw these transformational changes and this inflection point that was happening with this industry,” Chanin said.
The investment case for space has evolved beyond simple exploration into a critical pillar of terrestrial infrastructure. Chanin highlighted that reduced costs from reusable rockets have made various technologies economically feasible for the first time. Furthermore, the militarization of space has turned the sector into a strategic high ground for global governments.
UFO provides a rules-based approach to this theme, requiring at least 80% of the index to consist of pure-play space companies. These are entities deriving at least 50% of their revenue from space-related activities, ensuring the fund isn’t diluted by diversified conglomerates. The current portfolio includes high-conviction names such as Rocket Labs (RKLB), which Chanin views as a leading rival in the launch industry.
See more: “Rocket Labs (RKLB) Surge Boosts Space ETF UFO”
Positioning for the SpaceX IPO
A major catalyst for recent interest is the potential IPO of SpaceX. To capture this, the fund’s underlying index recently updated its methodology to allow for fast-track inclusion of mega-cap IPOs. This rule permits a company to be included just one day after its IPO price is calculated. Chanin argues that a SpaceX public debut would be “completely eye-opening” for the industry and retail investors alike.
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VettaFi LLC (“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.
