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UFO fund first-of-its-kind to invest solely in the final frontier

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You can now explore outer space from the comfort of your own desk.

Procure Holdings is starting the first ETF that invests solely in the final frontier. The Procure Space ETF (UFO) will start trading in New York on Thursday, the company said in a statement. The fund will track the S-Network Space Index, which holds companies that generate a sizable part of their revenue from satellite technology and other out-of-this-world industries.

Procure’s intergalactic foray is part of a wider industrywide push into so-called thematic funds, which typically target a narrow investment focus while charging handsome fees. Cut-throat competition for assets has forced asset managers to slash fees on products that follow broad, commoditized indexes yet assets in thematic ETFs have more than doubled over the last two years to about $49 billion, data compiled by Bloomberg Intelligence show.

The UFO ETF will invest in telecom companies and firms that transmit TV and radio content via satellites, as well as defense technology providers and the makers of rocket propulsion systems.

Among the index’s largest components are several well-known names, including satellite companies Intelsat, Inmarsat and Maxar Technologies. But the performance of these likely holdings suggests any gravity-defying returns could be quickly brought back to earth.

Fees were nearly half the price of the top-performing active funds.
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Intelsat is down about 14% this year amid concern the government may take a larger role in the sale of airwaves to wireless providers. Its peer Inmarsat is up 43% over the same time, while Maxar Technologies is down around 60%.

State Street started the SPDR Kensho Final Frontiers ETF (XKFF) last year, focused on the exploration of both space and the deep sea. Its fund is up about 2% since its October debut, lagging the S&P 500 of U.S. stocks.

UFO’s annual fee is 0.75%, or $7.50 for every $1,000 invested in the product. That’s almost eight times the cost of the SPDR S&P 500 ETF Trust, the largest ETF.

Bloomberg News