00:00As Scarlett and I teased at the top, it's SpaceX IPO week.
00:04You manage a fund, the Procure Space ETF.
00:07Your ticker is UFO.
00:08You don't actually hold SpaceX as a private company in this ETF,
00:12but talk us through the halo effect that you've seen on your portfolio
00:17as some of the hype builds around this IPO.
00:20Because, I mean, I take a look at your portfolio companies
00:23and they're all over sort of the space ecosystem.
00:27There has been an incredible interest in space going back towards the end of last year
00:33and something that has persisted into this year.
00:36There actually is a company in UFO, Echo Star, that had sold Spectrum to SpaceX
00:41in exchange for SpaceX stock.
00:44So that's certainly a name that people are looking at
00:46as a way to get some exposure potentially to the SpaceX IPO.
00:51But like you mentioned, other people are starting to look at the SpaceX ecosystem.
00:55What types of companies, supplies, parts they use.
00:59Then you look at launch.
01:00I mean, SpaceX significantly reduced the cost of accessing space,
01:04which has opened up tremendous opportunities for other companies
01:06to get involved in the space race as well.
01:08So I think investors are looking for all different types of ways
01:11to play this looming SpaceX IPO.
01:14And UFO has looked to be one of those beneficiaries from that trend as well.
01:18UFO is a passive ETF.
01:20And the biggest holdings right now are Rocket Lab and Viasat.
01:25When or how is your ETF going to be adding SpaceX once the company goes public?
01:30And I'm just curious what you think the weighting will look like.
01:33So, as you mentioned, we are passive.
01:36Our fund tracks the Vetify Space Index.
01:39Our fund has been a passive fund and out there for over seven years.
01:43And we've been very pleased with how our portfolio manager
01:47has been tracking that underlying index.
01:49Most recently, Vetify had announced that the index rebalance
01:54and reconstitution will occur this upcoming Tuesday, most likely.
02:00And at that time, if the SpaceX IPO does indeed go off on Friday,
02:06that it could be added to the index as early as Tuesday next week.
02:11So on day three.
02:14Yeah.
02:15Andrew, I wanted to ask you about NASA.
02:17You've been in this category for, I think, six or seven years.
02:21You kind of kicked it off.
02:22There was a State Street product also that was similar
02:24that launched back, I think, in 2019.
02:26You guys are sitting here.
02:28ARC comes in.
02:29You're all doing your thing.
02:30And then this NASA ETF comes out of nowhere.
02:33And in two months, it is the number one space ETF,
02:37obviously because it has SpaceX in there.
02:40What is going on here?
02:42Do you think that money is hot money that will leave once the IPO is done?
02:46And how do you plan to deal with the IPO in terms of days after it comes out?
02:53So as mentioned, we are a passive fund that has been tracking this index for over seven years.
02:59So as the index rebalances and reconstitutes,
03:02our portfolio manager looks to track that before fees and expenses.
03:06I'm certainly no stranger to coming out with a product and having many imitators come on afterwards.
03:14Adding, from everything I hear, you can't say that they have SpaceX.
03:20From what I've read, NASA uses an SPV, so it's not necessarily exact exposures.
03:27SPVs can have extremely high fees at times.
03:31Buyer beware.
03:32Read the funds prospectus, which has been amended since they had initially IPO'd that ETF.
03:37So active managers that don't necessarily have a long track record for certain industries will see how well over time
03:47that strategy will play out or others.
03:49We're happy to have an index that works with a space expert to do research on companies to derive the
03:57revenues actually from space.
03:58So our goal isn't to get cued and try to pick certain companies or make excuses for why certain companies
04:03might be a space company or not.
04:06But we follow the rules of the underlying index, and that's something that has been developed and maintained for a
04:12very long time.
04:13So we've been very happy with how that index has done and has handled new names coming to the industry.
04:22And hopefully we can continue to do so.
04:25Yeah, I mean, to your point on SPVs, it's been interesting to watch the concept of an SPV versus direct
04:30access to the shares get socialized to a broader investing public
04:34as people really scramble for access to SpaceX in sum four.
04:39And, Andrew, I would love to get your thoughts on the decision by the S&P not to fast track
04:45SpaceX into the S&P 500 and other indexes,
04:49SpaceX and other mega IPOs, because, of course, we saw NASDAQ make that decision for the NASDAQ 100.
04:55We saw that for FTSE Russell as well.
04:58And, you know, given that you manage a fund that tracks an index that has made the decision to, you
05:05know, sort of fax track inclusion there,
05:07I just wonder, you know, in your view, whether you think that was the right call by S&P.
05:13S&P has to do what they think is best for their brand and their company and their indexes.
05:20You know, I think many people have been investing in funds that track the S&P for a very long
05:26time because it has stayed fairly consistent
05:29and people tend to know what they're getting.
05:31So, you know, for them, that was a decision that they made, not necessarily analogous with every other large index
05:37out there.
05:38And, you know, certainly time will tell how those decisions play out.
05:41But for, you know, you've got many large funds and pensions and endowments and things and individual investors that have
05:51looked to the S&P 500, you know, for many years now.
05:55And so for them, you know, it seemed as if maybe they did something that was more consistent with how
06:00they've handled this type of process.
06:02But, you know, looking at the SpaceX IPO, this is an unprecedented IPO.
06:06We're talking about, you know, an extremely large potential market cap.
06:11We're talking about also a very low initial float being released into the marketplace.
06:15So, you know, I think this is going to be kind of a testing ground.
06:19The Saudi Aramco IPO several years back was maybe one of the more analogous times.
06:25But we're also hearing that many more IPOs might be coming out of the market of significant large market caps.
06:32Our index provider is calling it a mega cap IPO for this potential fast track inclusion.
06:37And it's not just because it comes out.
06:40You also have to look at float and other things in order to determine if the liquidity is there and
06:44if it makes sense for the index.
06:45You also have to look at float and other things in order to make sense for the index.
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