If You Invested in Procure Space ETF (UFO)

The Procure Space ETF (NASDAQ: UFO) is an exchange-traded fund that offers what its sponsor describes as pure-play exposure to the global space economy. According to multiple ProcureAM news releases, UFO was brought to market in 2019 as the world’s first ETF designed to focus on companies that are significantly involved in space-related activities and the broader commercial space industry.

The fund seeks investment results that correspond generally to the performance, before fees and expenses, of the S-Network Space Index. This index is described as a modified capitalization-weighted, free float- and space revenue percentage-adjusted equity index developed by S-Network Global Indexes. The index methodology examines criteria such as revenues derived from space activities and company size when selecting firms for inclusion. ProcureAM states that at least 80% of the index components are required to receive a majority of their revenue from space-related activities.

UFO’s underlying index focuses on companies that are significantly engaged in space-related business. ProcureAM notes that index constituents span several areas connected to the space sector, including satellite-based consumer products and services, rocket and satellite manufacturing, space technology hardware, and space-based data and intelligence services. The ETF is described as being concentrated in securities of companies that operate or utilize satellites, and its risk disclosures highlight potential manufacturing delays, launch delays or failures, and operational and environmental risks affecting satellite operations.

Investment approach and index linkage

The Procure Space ETF is described as not actively managed. Instead, it follows the rules-based S-Network Space Index. The fund’s literature explains that it would not take defensive positions in declining markets unless such positions are reflected in the underlying index. The S-Network Space Index is maintained using a defined methodology overseen by an index committee, and is intended to serve as an equity benchmark for a globally traded portfolio of companies engaged in space-related business.

According to ProcureAM, the index is also recognized as the first Certified Space Data Product™ acknowledged by the nonprofit Space Foundation. This designation is cited in connection with the index’s focus on companies whose revenues are closely tied to space industry activities. Approximately 80 percent of companies in the index are described as deriving the majority of their revenues directly from involvement in the space industry.

Exposure to the commercial space industry

ProcureAM characterizes UFO as a way for investors to gain exposure to the multibillion-dollar global space economy. The fund’s communications reference the growing investor interest in commercial space, including satellite infrastructure, launch providers, in-space services, and space-based data and intelligence. Over time, UFO has added newly public space-related companies to its portfolio during scheduled index rebalances and reconstitutions, reflecting the emergence of additional publicly traded firms in the sector.

Examples of companies that have been added to UFO during past rebalances include firms involved in orbital launch vehicles, real-time geospatial intelligence, in-space transportation and satellite servicing, laser-based communications, space manufacturing and 3D printing, and satellite-based data and analytics. These examples, cited in ProcureAM’s rebalance announcements, illustrate the types of activities that can qualify companies for inclusion in the S-Network Space Index and, by extension, the ETF.

Global and diversified space-related holdings

ProcureAM’s communications emphasize that the Procure Space ETF holds domestic and international constituents connected to the space sector. In a rebalance update, the firm highlighted the addition of companies from Sweden and South Korea, including businesses involved in integrated mobile satellite communications, satellite antennas and terminals, maritime satellite communications, and synthetic aperture radar (SAR) satellite systems capable of all-weather Earth monitoring. These examples underscore the ETF’s global scope within space-related industries.

The fund’s sponsor notes that UFO’s holdings and sector allocations are subject to change at any time and that a complete, current list of holdings is available through the sponsor’s own materials. The ETF’s risk disclosures also mention that investing in foreign securities can be more volatile, harder to price, and less liquid than investing in U.S. securities, and that securities of small- and mid-capitalization companies may experience greater price volatility and lower trading volumes than those of larger, more established companies.

Unique risk disclosures, including UAP risk

One distinctive feature highlighted in ProcureAM’s communications is the addition of an unidentified aerial phenomena (UAP) risk disclosure to the Procure Space ETF prospectus. The disclosure describes UAPs as flying objects that look or move unlike any known aircraft used by the United States or any foreign country. It notes that UAPs could create unintentional or deliberate operational, data security, cyber, and other interference with the operation of satellites and other objects in space, which could adversely affect the securities held by the fund.

More broadly, the fund’s risk language points to the sensitivity of aerospace and defense companies to government aerospace and defense regulation and spending policies. It also notes that the exploration of space by private industry and the harvesting of space assets is a business based in the future and is seeing new entrants, and that investments in the fund may be riskier than traditional investments in established industry sectors.

Trading and options availability

The Procure Space ETF trades on the Nasdaq Stock Market under the ticker symbol UFO. ProcureAM has announced that the ETF is also available for options trading via the Nasdaq Options Market, providing additional ways for market participants to express views on the space-related equity segment tracked by the fund. The sponsor has highlighted periods of growth in assets under management and noted that the ETF has attracted attention as a specialized product focused on the commercial space industry.

Sponsor background

UFO is issued by ProcureAM, LLC, which describes itself as an exchange-traded product issuer based in Levittown, Pennsylvania. ProcureAM is presented as a platform for the creation of proprietary and partnered exchange-traded products, with a focus on providing access to distinct investment themes. In addition to the Procure Space ETF, ProcureAM has launched other themed ETFs, such as a disaster recovery strategy fund, reflecting its emphasis on specialized investment exposures.

Key risks and considerations

Like other ETFs, the Procure Space ETF involves investment risk, including the possible loss of principal. The fund’s disclosures explain that shares are bought and sold at market price rather than net asset value, may trade at a discount or premium to net asset value, and are not individually redeemed from the fund. Brokerage commissions can reduce returns.

The sponsor highlights several categories of risk relevant to UFO’s focus, including:

• Sector concentration risk in companies that operate or utilize satellites, which face manufacturing, launch, operational, and environmental risks.
• Aerospace and defense risk, reflecting sensitivity to government regulation and spending policies.
• Foreign investment risk, including volatility, pricing challenges, and liquidity constraints in non-U.S. securities.
• Small- and mid-cap risk, including higher price volatility and lower trading volumes.
• Index tracking and non-active management risk, because the fund follows the S-Network Space Index and does not take discretionary defensive positions unless the index does so.

Prospective investors are directed in the sponsor’s materials to review the fund’s summary prospectus and prospectus for a more detailed explanation of objectives, charges, expenses, and principal risks.