Space ETFs in focus after Jeff Bezos, Blue Origin spaceflight

Andrew Chanin, ProcureAM CEO, joins Yahoo Finance to discuss how investors can get exposure to the space industry.

Video Transcript

KRISTIN MYERS: I want to turn now to our "ETF Report," brought to you by Invesco QQQ. And we're going to be chatting a little bit about space and space exploration, especially after we saw that successful launch just yesterday from Amazon founder Jeff Bezos. We're joined now by Andrew Chanin, CEO of ProcureAM. Andrew, great to have you here with us.

So let's just start with the best way and how to best, really, invest and really play in this space if space and space exploration is of interest. If you watched that launch yesterday, Richard Branson's launch last week, and you think, now is the time to put some money into it.

ANDREW CHANIN: So I'm not allowed to give investing advice. But that said, Blue Origin is a private company. It's difficult to get exposure for many investors to that company. So people looking to play the broader space economy, the commercialization of space, and the many different businesses that comprise the overall space industry, we created UFO, the first pure-play space ETF that gives investors instant diversification to currently 35 companies from around the world specializing in all different areas of the space industry.

ALEXIS CHRISTOFOROUS: So tell us about how people are getting some exposure. You know, we actually were talking to a space expert yesterday who was saying while space tourism sort of gets all the glitz, and the glam, and the attention, you know, investing in the space data is really where the growth opportunity lies.

ANDREW CHANIN: Space data is one important part of the space industry. But if you look back at the 2019 numbers, the space industry was estimated to be roughly a $424 billion industry. Roughly one-third of that is comprised of communications and satellites. And when you look at the various projections for the future-- Morgan Stanley at $1 trillion by 2040, Bank of America by $2.7 trillion by 2045-- and they view about half of that growth for the space economy coming also from communications and satellites.

And UFO has numerous companies from that part of the space segment of communications in our 35 holdings. And there are many different players and they all do so much and so many varying, different things that are also already very vital to many industries today.

KRISTIN MYERS: Curious how much headwinds you see coming out ahead. We've already heard from a couple of members of Congress that are actually talking about taxing and creating other regulations around some of this space exploration. Do you see that weighing on this industry going forward?

ANDREW CHANIN: I think it's several fold. One, I think it's very important to regulate space, because space is a precious commodity. And it's a new frontier. And we don't want to spoil it in any way or make it harmful for others to be able to explore space.

From the other standpoint, having more regulation will help us better understand what can and what can't be done, and hopefully hold everyone to playing by the same rules. So I actually could see that being a very positive thing for the industry as companies gain more confidence in that what they do will hopefully be able to see the light of day as opposed to spending fortunes on money in technologies that aren't allowed to access space.

ALEXIS CHRISTOFOROUS: I'm wondering how many ETFs there are out there that are pure-plays in the space area. You talk about the Procure Space ETF with the ticker symbol UFO, which I think is actually pretty cute, but what other kinds of opportunities do investors have to invest in these basket of stocks without going for individual stocks, with exposure to space?

ANDREW CHANIN: So right now in the US, UFO is the only pure-play space fund. And in order to be able to call it a pure-play space fund, the underlying index actually needed to prove that over 80% of the index was focused on companies deriving a majority of their revenues from space. And to my knowledge, there's no such other ETF in the US that allows for that.

So really, if someone's looking to get pure-play exposure to space in the US and looking for a US-listed type of security, it's UFO for a basket of pure-play names. Or you could try to build your own by trying to pick, and re-weighting, and doing all your research on individual pure-play space companies.

KRISTIN MYERS: Now, of course, Alexis asked you a little bit earlier, because of our conversation that we had with Chad Johnson yesterday from Space Capital, talking about the fact that space tourism isn't right now the most lucrative or the biggest portion of this space exploration space. However, what are you projecting from the space tourism piece of it going forward? Are you imagining that and-- forgive the pun-- at least that the revenue here, that the investments in space tourism really can get on a rocket ship and head to the moon?

ANDREW CHANIN: We'd love to see this become a growing industry, because what it does is it allows more people to access space. Right now, the costs are fairly prohibitive for most individuals looking to take this once-in-a-lifetime space tourism opportunity. And I've seen projections from others saying that by the end of this decade, that that segment will represent roughly just north of $3 billion annually.

But really, if you think about it, the technologies that they're building hopefully will be able to help lower the cost for future travelers, help lower the cost to send things into space, and maybe space tourism won't be just a couple of minutes going in a rocket with a couple of minutes of weightlessness, but hopefully much longer types of opportunities. And those various technologies that they're building today can hopefully propel us to that reality in the future.

KRISTIN MYERS: All right, we'll have to leave that there. Andrew Chanin, CEO of ProcureAM, thank you so much for joining us today.

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