Truly Out Of This World Investing: Space ETFs

In the 1960s, the so-called 'Space Race' was between the United States and Russia. Today we are once again in the midst of another space race. However, this time around, it's not two superpower countries battling it out; it's businessmen. In the 60's the battle for space was in most ways geared around bragging rights, military power, and nationalism. Today, it still is in many ways about bragging rights and as a way to make money. And let's be honest, the billionaires shouldn't be the only ones getting weather from this battle.

To many people, the current battle for space is still seen as a lot of science fiction. But, what a lot of these companies are doing today, could pave the way for the next generation's technological advancements. So, what is taking place just outside our atmosphere is really going to change the way we live, not in 20 or 30 years from now, but just a few years from now.

For example, Elon Musk's SpaceX company offers satellite internet service through its "Starlink" program. The Starlink program is an internet provider that uses satellites floating around Earth to make an internet connection. This is very similar to satellite radio from SiriusXM or satellite TV service through someone like DISH Network. At the time, Starlink is not a huge success, but some predict that it will become more and more popular in the coming years due to the worldwide availability of the internet that Starlink offers.

Today's typical internet provider requires users to have either a hardwire connection or access to a local cell tower. Both of the current options work fine in the vast majority of cases. However, what about when there is a natural disaster and the grid is damaged, whether the hardwire that has been run, or a local tower is damaged. Starlink would work regardless of past, present, or future weather situations, baring some cloud coverage situations when it may interfere with service.

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Furthermore, just a few weeks ago, there were rumors that the new Apple (APPL) iPhone was going to have satellite capability for communication purposes. The rumor was the new iPhone would have the required hardware so that in emergencies, iPhone users would be able to contact help by using a current satellite network already in place for this purpose. Currently available to consumers is the capability to communicate using satellites with either voice or data (text messaging) services. Most people have heard of satellite phones or even an EPIRB for a boat. The rumor was that you would no longer need to buy a specific phone for satellite communication and that your iPhone would be able to connect with the satellites and offer you communication access when in emergencies.

Most people won't ever need a satellite phone or EPIRB due to them going on extreme adventures in the wilderness or on a boat far offshore. However, with increased natural disasters occurring, the idea that people would be able to communicate with rescuers after a hurricane, flood, or wildfire is something most Americans wouldn't necessarily prepare for but could be available to them just because they have a run of the mill cell phone.

The Starlink internet service and possible iPhone satellite communication capabilities are just two of the many real-world opportunities that space is and will offer us in just the next couple of years, let alone the next decade or more. Which, is why now may be the best time to start investing in these out-of-this-world opportunities. One easy way to do that is by using ETFs that own companies operating in this space.

Two ETFs worth looking into are the Procure Space ETF (UFO) and the ARK Space Exploration & Innovation ETF (ARKX). The two ETFs are relatively new, with inception dates of 2019 and 2021. They both focus on investing in companies that are involved in some form or fashion in outer space. The UFO fund has 35 holdings, while the ARK fund has 85. Both of these ETFs will be high risk, high reward, and definitely will require a long timeframe mindset. While there are already satellite companies in operation, and Elon Musk's Starlink is already servicing customers, the real business opportunities of space may not even have presented themselves to investors at this time.

This is one time that the saying "the sky is the limit" really honestly is true.

Matt Thalman
INO.com Contributor - ETFs
Follow me on Twitter @mthalman5513

Disclosure: This contributor did not own shares of any investment mentioned above at the time this blog post was published. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.

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