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Will Space ETFs Ride SpaceX Ship's Latest Success?

Sweta Jaiswal, FRM

In this era of technological advancements, several private and public companies have been running trials and working with NASA to develop spacecraft and advance in the space field over the past decade.  In fact, on May 30, private company SpaceX launched the Dragon capsule on top of a Falcon 9 rocket, boarded by NASA astronauts Doug Hurley and Bob Behnken from Launch Complex 39A (LC-39A) at the Kennedy Space Center in Florida.

It is believed that the latest achievement will open up bountiful of opportunities for other players in the space technology arena. Recent developments and further research in the pipeline are expected to boost the industry in the near term. Morgan Stanley estimates that the global space industry will generate revenues of $1.1 trillion or more by 2040.

SpaceX Ship Touches New Milestone

SpaceX’s latest success has highlighted the fact that launching satellites to outer space can be achieved in a cost-efficient way. This private company’s partially-reusable Falcon 9 rocket and Crew Dragon capsule combination is very competitive in price as well. Going on, SpaceX has set the record of being the first private company to send man into outer space, joining the governments of the United States, Russia and China in the endeavor.

Houston-based company Axiom Space has already booked a Crew Dragon flight to the ISS, with liftoff aimed in late 2021 (per an article on Space.com). Going on, Virginia-based Space Adventures plans to use SpaceX’s capsule around the same time to carry passengers on a mission to high=Earth orbit, far above the ISS (per an article on Space.com).

Notably, the Dragon capsule or spacecraft has the capacity of ferrying up to seven astronauts and is called the Crew Dragon. The Crew Dragon capsule, now known as Endeavour, has successfully docked with the ISS. Meanwhile, Cargo Dragon ferries cargo to outer space.

Going on, SpaceX has been flying robotic cargo flights to the ISS for NASA since 2012 (per an article on Space.com). The company also has a $2.6-billion NASA contract to conduct six such operational flights, the first of which is targeted for late August, given that the Demo-2 is successful, per the article.

Space ETFs to Gain

Given the latest technological advancements, new milestones are being frequently achieved in the space industry. Per an article on Space.com, Richard Branson's Virgin Galactic has already conducted two piloted missions to suborbital space with its newest SpaceShipTwo vehicle, VSS Unity. The company is conducting the final phases of its test campaign and seems to be well positioned to start carrying space tourists aboard the six-passenger Unity in the near term, per the article.

Following are some ETFs that investors can consider if they wish to park their money in this high-potential space:

Procure Space ETF UFO

The Procure Space ETF seeks investment results that correspond generally to the performance, before the fund’s fees and expenses, of an equity index called the “S-Network Space Index” developed by S-Network Global Indexes. The fund’s underlying index is designed to measure the performance of companies engaged in space-related industries. Holding a basket of 29 stocks, the fund has AUM of $17.1 million. It has an expense ratio of 75 basis points (bps) (read: ETFs to Tap the Trending Space Tourism Market).

The SPDR S&P Kensho Final Frontiers ETF ROKT

The fund seeks to track an index utilizing AI and a quantitative weighting methodology to capture companies whose products and services are driving innovation in the exploration of the final frontiers, which include areas of outer space and the deep sea. Holding a basket of 25 stocks, the fund has AUM of $4.7 million. It has an expense ratio of 45 bps (read: Why Space ETFs Are Taking Off).

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SPDR SP Kensho Final Frontiers ETF (ROKT): ETF Research Reports
 
Procure Space ETF (UFO): ETF Research Reports
 
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