[Real Investment] The Next-Generation ETF Investment Keyword is 'Uju'

Tesla Investment Ark Invest Returns 170%

[Asia Economy Reporter Minji Lee] Recently, the next-generation innovative industry attracting attention in the exchange-traded fund (ETF) market is 'space.' ARK Invest, which achieved over 170% returns through early investment in Tesla, has ignited investors' interest by initiating investments in the space industry.

According to the financial investment industry on the 10th, the Procure SPACE ETF listed in the United States has surged about 23% this year. This ETF is composed of companies engaged in space-related industries, including Gilat Satellite, Virgin Galactic, Maxar Technologies, Loral Space, Orbcomm, Iridium Communications, and Viasat. The company explained that 80% of the constituent stocks are companies profiting from space business.

ARK Invest, which aims to invest in companies capable of achieving 'disruptive innovation' from a long-term perspective, has announced the launch of a space-related ETF, which is estimated to have significantly increased the returns of related ETFs. Last month, ARK Invest submitted a filing to the U.S. Securities and Exchange Commission (SEC) for an ETF themed on aerospace. Although the specific companies to be included have not yet been disclosed, investors anticipating a second Tesla myth have preemptively started securing stocks, as ARK Invest recorded substantial profits by holding Tesla, which saw a 743% stock price surge last year. Additionally, this year, SpaceX, founded by Elon Musk, began satellite internet services, and Virgin Galactic, a space development listed company, is preparing tests to launch space travel services, further expanding domestic investors' interest.

There is currently no space-themed ETF in the domestic market. The domestic space industry is government-led and is classified as being in its early stages in the private market. Looking at the allocated budget alone, the Korea Aerospace Research Institute has 600 billion KRW, whereas NASA in the U.S. has 27 trillion KRW, which is 4400% more. A financial investment industry official said, "For asset managers to launch an ETF, index composition requirements must be met, but since there are still few related companies, it will take time to launch. However, if interest is high in domestic and overseas markets and many related indices are released overseas, launching an ETF using foreign indices is also possible."

Among domestic companies transforming into space development firms are Hanwha Systems, developing small satellites and antennas; Korea Aerospace Industries, entering the launch vehicle and medium-to-large satellite business; and Satrec Initiative, a satellite system developer, along with Hanwha Aerospace, which acquired shares in the company.

Choi Jin-myung, a researcher at NH Investment & Securities, said, "The domestic market shows a lag in space development compared to advanced countries but is catching up by focusing on launch vehicle technology and satellite technology development. In the domestic market, Korea Aerospace Industries and Hanwha Systems are expected to see stable growth in the defense industry along with an expansion in satellite exports."

Meanwhile, ARK Invest's 'Big Ideas 2021,' which selected 15 innovative investment themes at the end of last month, predicted that Bitcoin would also be named among next-generation innovative industries. ARK Invest forecasted, "If every S&P 500 listed company allocates 1% of its cash to Bitcoin, the Bitcoin price could rise to $40,000." Currently, there are no ETFs themed on Bitcoin and cryptocurrencies in the U.S. stock market, but the possibility of their launch has increased. VanEck Asset Management and Valkyrie Investments have applied for Bitcoin ETF approval, and the SEC is reportedly in the review stage.