Investor interest in the commercial space industry is surging, thanks to anticipation over a potential SpaceX IPO. Space ETFs pulled in $86 million in March alone, bringing inflows to $437 million year-to-date. The Procure Space ETF ($UFO) has been one of the biggest beneficiaries of that enthusiasm, growing to more than $700 million in AUM after attracting $500 million in flows since the start of the year. The fund launched in 2019. 

Andrew Chanin, CEO of ProcureAM says that even though excitement might look sudden, the transformation has been quietly building for years. 

“We’ve been big believers in the space economy for many years now,” Chanin said. “Apparently we’re a seven-year overnight success.”

Chanin explained that the SpaceX IPO is receiving so much attention because the company fundamentally changed space exploration through reusable rockets, which dramatically reduced launch costs. That alone opens the door to a broader commercial ecosystem. 

“This IPO deserves the attention that it’s getting and could be truly transformational,” he said.

But, Chanin explained that investing in space isn’t simply about rockets and astronauts. The modern space economy includes communications infrastructure, satellite connectivity, launch systems, aerospace manufacturing, and data transmission.

“Space is acting as that digital data toll operator on this digital data superhighway,” Chanin said. He pointed to the overlap between space infrastructure and AI, autonomous systems, blockchain, and more. 

That overlap is becoming more important as companies explore the concept of space-based data centers. 

“We’re hearing from private companies and public companies today that are already developing their solutions,” he said. Some people, Chanin said, believe that the SpaceX IPO proceeds could one day fund orbital or lunar data center infrastructure. 

And another critical driver for the sector’s growth? Defense spending. 

“The defense side is a must spend now,” he explained, pointing out the escalating competition between the United States, China, Russia, India, and Europe, blurring the line between defense spending and commercial innovation.

Chanin did acknowledge that thematic investing in space still faces skepticism. A lot of critics argue that space ETFs include companies only loosely connected to the theme itself. Chanin says that $UFO tries to address that concern through strict portfolio construction rules requiring that at least 80% of the fund’s holdings consist of “pure play” space companies that derive at least half of their revenue from space-related activities. 

Chanin believes many investors still underestimate how much space has become integrated into the broader economy.

“I think most people don’t truly understand the commercial space industry,” he said.

Chanin says that misunderstanding however, creates opportunity. And in the long term Chanin believes the investment case is tied to infrastructure, instead of hype. 

“The infrastructure buildout today and how we can build off of that and the opportunities that could present into the future,” he said.

Source: The ETF Show - Upcoming SpaceX IPO Fuels Space Exploration ETF Boom