VanEck has launched a new thematic equity ETF in Europe providing pure-play exposure to companies operating within the global space industry.
Demand for satellite-based internet services are expected to receive a boost from the introduction of 5G broadband and the metaverse.
The VanEck Space Innovators UCITS ETF has been listed on London Stock Exchange in US dollars (JEDI LN) and pound sterling (JEDG LN) as well as on Deutsche Börse Xetra in euros (JEDI GY).
According to research from Morgan Stanley, the commercial space sector is set to expand from its current level of around $350 billion into a trillion-dollar industry by 2040.
This stellar growth is being driven in part by falling costs due to the emergence of new technologies such as reusable rockets and smaller next-generation satellites.
At the same time, on the demand side, the introduction of 5G broadband and the development of the metaverse will necessitate greater data capacity to be provided by satellite-based internet services.
Satellites are also expected to play a greater role in the world’s fight against climate change as they have become an indispensable part of researching and monitoring greenhouse gas emissions as well as the state of the oceans, global temperatures, and sea levels.
And while space tourism is still in its infancy, many future passengers have already put down flight deposits of millions of dollars, highlighting the enormous potential for this budding industry.
Commenting on the outlook for the space industry, Martijn Rozemuller, CEO at VanEck Europe, said: “A new space age has begun. In recent years, space technologies have made great strides, and the cost of rocket launches and satellites has dropped significantly. As a result, space has become a lot easier and cheaper to reach, opening up entirely new business areas.
“While rockets and satellites used to be developed and launched primarily by governments, a variety of commercial companies are now engaged in building and operating these technologies. At the same time, space is starting to come back onto the agenda of governments – but they are increasingly relying on the services of private companies in this new commercial space age.”
Methodology
The fund is linked to the MVIS Global Space Industry ESG Index which selects its constituents from a universe of developed and emerging market stocks with market capitalizations above $150 million and average daily trading volumes greater than $1m.
The index first screens out violators of UN Global Compact Principles, companies involved in controversial weapons, and firms that derive at least 5% of their revenue from thermal coal, fossil fuels, oil sands, nuclear power, civilian firearms, and tobacco.
The methodology selects companies that generate at least 50% of their revenue, or have the potential to generate at least 50% of their revenue, from the following space-related business segments: Space Exploration (commercial spacecrafts, space tourism, scientific research, and the delivery of cargo to space); Rockets and Propulsion Systems (space vehicle systems and equipment, space payload, and materials and equipment used to build spacecrafts); Satellite Communications (systems and software for satellite-based communication); and Satellite Equipment (systems and software for areas such as research, earth observation, space imaging, and GPS).
Index constituents are weighted by market capitalization subject to an individual security cap of 8%.
The ETF comes with an expense ratio of 0.55%.
The fund is the second thematic ETF in Europe to target the space industry following the June 2021 launch of the Procure Space UCITS ETF (YODA LN). YODA tracks the S-Network Space Index, currently houses $15m in assets, and comes with an expense ratio of 0.75%.