Published on 9 Mar 2023 on ETF Trends via Yahoo Finance

Space Is Far, But Investing in Space Is Closer to Home

This article was originally published on ETFTrends.com.

Last week’s VettaFi Voices On discussed small-cap stocks in ETFs. In this conversation, I discussed the dichotomy of companies within thematic ETFs: 1) new emerging companies that disrupt an industry and 2) large, incumbent companies with the scale and cash to invest in newer trends. While many investors and advisors focus on the first type, the second type is particularly important in context of ETFs. These companies support the diversification benefit of investing in an ETF vs. individual stocks by balancing out some of the high-risk/high-reward new entrants with relatively stable companies that still benefit from the same thematic trend. The space sector is one area where this applies to—from the private space race to commercial satellites that broadcast into our televisions and phones. This note discusses what is really inside the S-Network Space Index (SPACE), which is the underlying index for the Procure Space ETF (UFO).

Most space companies have been around for many years. Many space companies are actually commercial satellite providers or aerospace/defense companies with long operating histories. There are a few newer entrants within the space, but many of these have 10+ years of history and more recently went public via a SPAC merger. The median age of a company by operating history within the index’s top ten constituents was 28 years. The median age of a company using public trading history was over 15 years.