When people think of investing in space, a key theme within the Viewpoints Financial Personality, they may not realize that satellites are an integral part of the sector. Satellites are of key importance for a variety of practical uses and current events have highlighted their value during geopolitical conflicts.
We spoke to ProcureAM to learn more about the role satellites are playing in modern combat. Investors looking for exposure to satellite companies may consider UFO, the Procure Space ETF, the world’s first pure-play space ETF. UFO contains 40+ publicly traded, space-related companies.
TIFIN Personality: How are space products impacting the current conflict in Ukraine?
Procure: As combat shifts on earth, it’s clear that satellite communications will play an increasingly important role. The current conflict in Ukraine is confirming the importance of space-based imagery and communications in modern warfare. The value of space-related products and services are and will be intrinsic to military strategies, logistics, safety, defense, and operations. Space-driven ground imagery, communications, weather forecasts, and cybersecurity have been integral to the current military situation.
The obvious and immediate value of space applications during warfare has been the ability to observe military forces on the ground. Satellite imagery has been critical in identifying the location, size, and movement of military equipment and ground troops. This data has helped determine strategic decisions and real-time military responses.
TIFIN Personality: Satellites have also been able to substantiate or refute what’s being reported. How can they help with avoiding “fake news”?
Procure: Exactly. The view of damage to buildings has also helped to refute conflicting claims of success or progress in military actions. Credibility was lost when statements were inconsistent with the objective reality. This imagery has helped shape public opinion and has been instrumental in generating public support and aid from allies.
Satellite communication is also essential in warnings to civilians and interacting with allies. Current land communications infrastructure is vulnerable to ground attacks. The use of satellites for communications in remote areas is critical. Plus in areas where information is controlled, citizens can bypass centralized channels of communication and maintain links to the outside world.
TIFIN Personality: Space has generally been an area of international cooperation. What does the current conflict mean for that cooperation going forward?
It has been hoped and discussed that the exploration of space would be a joint endeavor by multiple nations and space agencies. A prime example of international cooperation has been the joint International Space Station that has been operated by the United States and Russia. However, recent sanctions have raised concerns that combined international and intergalactic programs may be risky and questions remain on whether international cooperation will be a reality, or whether each nation will need to rely on its own resources in the future.
TIFIN Personality: What about the security of the satellites themselves?
Satellite cybersecurity is a very real risk. The threat of cybersecurity attacks has been known for a long time, but is gaining increased attention during the current military activity in Ukraine.
Government agencies have been calling for more funds, efforts, and systems to be put in place to monitor, prevent, and cure cybersecurity attacks on space assets. Proposals have been formulated to create treaties to prohibit cyber attacks against space systems.
Currently, cybersecurity attacks on satellite networks can be overcome relatively quickly. However, creating systems to prevent hacking in the first place would be a better solution.
TIFIN Personality: What is the future of space and warfare?
Procure: According to international strategist and author George Friedman, time will be the new most important weapon because who sees first, will shoot first. Centralized management, like the Pentagon, will be obsolete and military decisions will be made on a decentralized basis most likely from outer space.
New technologies will be able to make headquarters invisible to the enemy. In addition, tactical combat will be obsolete. Space-based weapons will aim for targets on the ground. Space-based technological assets will be more important than troops and military equipment on the ground.
Recent events have brought attention to national and international research and investments in satellite products and capabilities. The US Space Force, NASA, Department of Defense, and public and private companies are continuing to fund new projects, applications, and technologies utilizing satellites in space.
Please consider the Funds investment objectives, risks, and charges and expenses carefully before you invest This and other important information is contained in the Fund’s summary prospectus and prospectus, which can be obtained by visiting procureetfs.com. Read carefully before you invest.
Investing involves risk. Principal loss is possible. The Fund is also subject to the following risks: Shares of any ETF are bought and sold at market price (not NAV), may trade at a discount or premium to NAV and are not individually redeemed from the funds. Brokerage commissions will reduce returns.
Aerospace and defense companies can be significantly affected by government aerospace and defense regulation and spending policies. The exploration of space by private industry and the harvesting of space assets is a business based in future and is witnessing new entrants into the market. Investments in the Fund will be riskier than traditional investments in established industry sectors. The Fund is considered to be concentrated in securities of companies that operate or utilize satellites which are subject to manufacturing delays, launch delays or failures, and operational and environmental risks that could limit their ability to utilize the satellites needed to deliver services to customers. Investing in foreign securities are volatile, harder to price, and less liquid than U.S. securities. Securities of small- and mid-capitalization companies may experience much more price volatility, greater spreads between their bid and ask prices and significantly lower trading volumes than securities issued by large, more established companies. The Fund is not actively managed so it would not take defensive positions in declining markets unless such positions are reflected in the underlying index. Please refer to the summary prospectus for a more detailed explanation of the Funds’ principal risks. It is not possible to invest in an index.
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ProcureAM, the Fund Manager for UFO, the Procure Space ETF (UFO) provides compensation to TIFIN Grow, LLC or one its affiliates to be a sponsored fund which provides the fund greater visibility. A conflict of interest exists between ProcureAM and TIFIN because of this compensation arrangement. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs.