ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Themes
      • Active ETF
      • Artificial Intelligence
      • Beyond Basic Beta
      • China Insights
      • Climate Insights
      • Core Strategies
      • Crypto
      • Direct Indexing
      • Disruptive Technology
      • Energy Infrastructure
      • ETF Building Blocks
      • ETF Investing
      • ETF Education
      • ETF Strategist
      • Financial Literacy
      • Fixed Income
      • Free Cash Flow
      • Innovative ETFs
      • Institutional Income Strategies
      • Leveraged & Inverse
      • Managed Futures
      • Market Insights
      • Modern Alpha
      • Multifactor
      • Responsible Investing
      • Retirement Income
      • Tax Efficient Income
    • Asset Class
      • Equity
        • U.S. Equity
        • Int'l Developed
        • Emerging Market Equities
      • Alternatives
        • Commodities
        • Gold/Silver/Critical Minerals
        • Currency
        • Volatility
      • Fixed Income
        • Investment Grade Corporates
        • US Treasuries & TIPS
        • High Yield Corporates
        • Int'l Fixed Income
    • ETF Ecosystem
    • ETFs in Canada
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
  • Research
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF of the Week Podcast
    • ETF Prime Podcast
    • Video
  • Company
    • About VettaFi
    • Get VettaFi’ed
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Index Insights
  2. Investing in Space: Satellites Show the Big Picture
Index Insights
Share

Investing in Space: Satellites Show the Big Picture

Roxanna Islam, CFA, CAIAMar 09, 2022
2022-03-09

2022-03-10 10_54_27-Edit Media ‹ Alerian — WordPress

In early 2022, fear of higher interest rates contributed to a tech sell-off, and many investors exited riskier emerging technology companies, start-ups, and other high volatility investments within the space sector. But recent geopolitical conditions relating to Ukraine have revitalized interest in a different segment of the space sector—satellite and aerospace companies that provide “earth intelligence” and military defense. Today’s note focuses on some of the defense-oriented constituents in the S-Network Space Index (SPACE).

The breadth of the index gives it exposure to both satellite companies and defense companies.

Among the most memorable images this year was an aerial view of Russian military vehicles moving into Ukraine. Additional high-resolution images show the damage and destruction in Ukrainian cities. These images were taken by commercial satellites—with the most widely circulated images coming from Maxar Technologies (MAXR). MAXR is currently the index’s largest constituent with a weight of 6.3% as of March 4, 2022. MAXR is a satellite company that provides earth intelligence (i.e., data and aerial images) to its partners. It has completed several successful contract renewals over the past 20+ years with its largest customer—the U.S. government—which helps provide the company with a stable revenue stream.(1) Another constituent Viasat (VSAT), which holds a 5.4% weight in the SPACE index, provides broadband service to geographies including Ukraine. This company has made headlines recently by bringing attention to possible Russian cyberattacks on its satellites. Like MAXR, VSAT has been able to aid the U.S. and Ukrainian governments during the current conflict.

The SPACE index also has a 20% exposure to “diversified” companies where space business is significant, but space revenues are less than 50% of the companies’ total annual revenue. Many of these companies are aerospace and defense companies like Lockheed Martin (LMT) and Northrop Grumman (NOC), which have 3.7% and 3.5% weights within the index, respectively. These companies benefit directly from investments in weapons and national defense—in the near-term as resources are sent to Ukraine and also in the long-term as governments across the globe re-evaluate their defense budgets. Germany and Denmark are among the countries that are in the process of boosting defense budgets. The United States could likely increase their defense budget and is also evaluating a $13.6 billion provision to aid Ukraine as part of an omnibus spending package—half of which will likely go toward defense.(2)

Long-term implications for the space sector are still supported by digital trends.

Although recent geopolitical events in Ukraine may seem like a short-term catalyst for the industry, the situation has brought more investor awareness to the space industry and has supported the longer-term digital trends underlying this sector. Satellite images are essential for providing real-time data for military and government use but also paint a picture for the broader public. In an increasingly digital world focused on social media and internet, digital images can deliver a message much stronger than words can. Going forward, satellites may play a larger role in conveying political, geographical, and environmental situations. More trends supporting the growth of satellites and the overall space industry can be found here.

Bottom Line:

The recent conflict in Ukraine has brought renewed attention to the space industry and its importance to national defense. Unlike 2021, which showcased the attractiveness of higher risk, emerging tech companies, recent geopolitical events have highlighted satellite and aerospace companies and their role in “earth intelligence” and military defense.


The S-Network Space Index (SPACE) is the underlying index for the Procure Space ETF (UFO).


The S-Network Procure Space Net Total Return Index (SPACENT) is the underlying index for the Procure Space UCITS ETF (YODA).



Content continues below advertisement

Table Thematic 03_10_22


Related Research:


Four Megatrends Elevating the Commercial Space Industry


Streaming and Gaming: Playing the Digital Transformation


Investing in Electric Vehicles: What the FUTURE Could Bring


Investing in E-Commerce: The Future of Search, Shop, & Ship


Digging into 2021 Gold Miners Index Performance


Crypto Mining for Digital Gold is Turning Green


 


1 Maxar 4Q21 Earnings Call Deck


2 Democrats Remove Coronavirus Funding From Omnibus Spending Package – WSJ




This is the image alt text



 

» Popular Pages

  • Tickers
  • Articles

Sep 29

A Fixed Income Primer for Constructing Portfolios

Sep 29

Main Management Market Note: September 29, 2023

Sep 29

Higher for Much Longer?

Sep 29

Moving Averages: S&P Ends September Down 4.9%

Sep 29

This Week in ETFs: FormulaFolios Renamed & Adds New Funds

Sep 29

Play Online Car Sales News in These 2 China ETFs

Sep 29

SEC Opens Ethereum Futures ETF Floodgates

Sep 29

VettaFi Voices On: Managing Risk in an Uncertain Economy

Sep 29

SPYI Outperforms SPY in Challenging 3rd Quarter

Sep 29

More Rate Hikes? Watch Treasury ETF USFR

QQQ

Invesco QQQ Trust Series I

SPY

SPDR S&P 500 ETF Trust

VOO

Vanguard S&P 500 ETF

JEPI

JPMorgan Equity Premium...

TSLY

YieldMax TSLA Option Income...

SMH

VanEck Semiconductor ETF

VTI

Vanguard Total Stock Market...

SCHD

Schwab US Dividend Equity ETF...

QQQM

Invesco NASDAQ 100 ETF

IVV

iShares Core S&P 500 ETF

Loading Articles...
Our Sites
  • VettaFi
  • Advisor Perspectives
  • ETF Trends
Tools
  • ETF Screener
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Database Pro
More Tools
  • Financial Advisor & RIA Center
Explore ETFs
  • ETF News
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Information
  • Contact Us
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X