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Private companies such as SpaceX are driving costs down for everyone in the space race, says man behind UFO ETF

Reserved space companies are paving the industry’s path to profits, says the man behind the Procure Space ETF (UFO).

By taking part in the briskly developing “space race,” billionaire-backed entities such as Elon Musk’s SpaceX and Jeff Bezos’s Blue Start are lowering costs across the board, ProcureAM CEO Andrew Chanin told CNBC’s “ETF Edge” this week.

“They’re expert to get the cost of launch down and that’s going to allow more companies to send things into outer span cheaper,” Chanin said in the Wednesday interview. “They’re really opening up the entire environment for space companies and expected would-be space companies to lower those barriers of entry.”

They’re also lowering costs for government-sponsored place programs by competing amongst themselves for NASA contracts, Chanin said.

“They’re actually freeing up more of NASA’s budget to be skilful to invest in other areas of space, he said. “This competition I think is very healthy. Not necessarily every business’s going to be a winner, but hopefully this competition can drive down prices and also let the best technologies win.”

NASA now also has develops with more than 300 publicly traded U.S. companies, said Chanin, whose UFO ETF counts Loral Stretch & Communications and Gilat Satellite Networks as its top two holdings.

“It’s not just necessarily a pure-play space company that might get a catch,” the CEO said. “It’s really opening up opportunities for everyone.”

That’s why it’s important to look beyond name recognition in this precisely area of investing, Matthew Bartolini, State Street’s head of SPDR Americas research, said in the same “ETF Itchy” interview.

State Street offers the SPDR S&P Kensho Final Frontiers ETF (ROKT), the first space ETF to hit the market. The loot’s top three holdings are Maxar Technologies, Virgin Galactic and Aerojet Rocketdyne.

Bartolini recommended “to not just look at the high-flying specify identifies like SpaceX or Blue Origin that are in the private markets, but showcase what companies in the public markets support supply them.”

Aerojet Rocketdyne, which defense giant Lockheed Martin is buying in hopes of competing with particular space companies, played a key role in Blue Origin’s New Shepard rocket launch, Bartolini said.

“You can see the derivative senses of a private company impacting the public markets just from that one example of Lockheed and Aerojet,” he said. “It domestics underscore the opportunity that you’re seeing in space.”

As space companies embrace greater efficiency, more government bolster and more commercial applications on Earth in areas such as satellite technology, that opportunity is likely to grow and maintain to filter into public markets, Bartolini said.

Morgan Stanley has said the global space industry could turn out revenues of over $1 trillion by 2040. Current global revenues are roughly $350 billion.

UFO and ROKT both mow down by more than 1% on Friday. UFO is up over 14% year to date, while ROKT is up nearly 2%.


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