They may have never encountered unidentified flying objects, but something savvy investors can identify with is outperformance. And the Procure Space ETF (UFO) has been doing just that this year: outperforming the S&P 500 with an over 60% gain.
With the markets heavily fixated on artificial intelligence (AI) themes that have been powering much of 2025’s stock market gains, UFO offers a more discerning growth segment. It’s not just about sending rockets to space in order to identify other lifeforms. The industry also includes the buildout of satellites, launchers, and services that support broadcast television and GPS for consumer devices. These are what research firm McKinsey & Company defines as “backbone applications” that support the space economy.
That said, this specialized sector has the third party research backing its potential. McKinsey last year estimated that the global space economy could touch the $1.8 trillion mark in 10 years. Because of the rapid growth trajectory, McKinsey actually had to revise the figure $630 billion higher from 2023. To further punctuate the enormity of its growth trajectory, McKinsey also noted that the expected annual growth rate for backbone space applications is double that of the forecasted growth rate of global GDP over the next 10 years.
UFO seeks investment results that track the S-Network Space Index. It includes companies that are pertinent to the space economy. Those can also align with revenue generation for companies that use space technology. As McKinsey identified, Uber is a prime example. The company’s rideshare application relies on the satellite signals sent to consumers’ mobile devices in order to connect drivers with riders as well as provide directions.
What’s Rocketing This ETF Higher?
As of October 17, almost 10% of the fund includes AST SpaceMobile Inc, which is up nearly 300% for the year and, as Yahoo! Finance noted, up 1,100% the past three years. Those astronomical gains are certainly helping to rocket UFO higher, as the company has ambitious plans for the future. That includes the buildout of a space-based cellular broadband satellite network. It will provide users with 4G and 5G connectivity practically anywhere — even during a flight.
At almost a 6% weighting is the second largest holding: Rocket Lab Corp. It recently signed a two-launch contract with the Japanese Aerospace Exploration Agency (JAXA), which will use the company’s Electron rockets to deploy satellites into orbit as part of JAXA’s Innovative Satellite Technology Demonstration Program.
“It’s an incredible honor to be entrusted by JAXA to further their goals of innovation and development for Japan,” Rocket Lab Founder and CEO Sir Peter Beck said.
Earth imaging satellite company Planet Labs rounding out the top three holdings with just over a 5% weighting. It just got its stock price target raised by Cantor Fitzgerald. Planet Labs stock is up over 200% for the year and over 400% within the last 12 months. It’s also making waves in the industry with the promise of satellites that can provide images within an hour.
As the aforementioned examples prove, the space industry is generating plenty of buzz. With a strong growth trajectory providing ample rocket fuel, UFO could be primed to soar to greater heights.
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Originally published on ETF Trends
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VettaFi LLC (“VettaFi”) is the index provider for UFO, which it receives an index licensing fee. However, UFO is not issued, sponsored, endorsed or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of UFO.
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