Joining the billionaires investing in the space race could put some rocket fuel into your portfolio
Space projects are grabbing more and more headlines and increasing piles of investor cash as companies in the US, China and elsewhere turn to the skies above for economic gain and military advantage.
The incredible sight of SpaceX’s Falcon rockets gracefully landing back on terra firma after a recent trip beyond the stratosphere exemplifies the rapid progress being made in this arena.
Some of the world’s richest and most famous people such as Elon Musk and Jeff Bezos are driving forward progress in the field, but you don’t have to be a billionaire to invest in the new space race.
A SpaceX Falcon 9 rocket transporting a satellite lifts off from Cape Canaveral
First and foremost, these developments are fascinating to observe in their own right as demonstrations of humanity’s enduring capacity to achieve technological progress and master the world around us.
They also provide food for thought for investors though, as a booming area of technology is always a potential goldmine for returns.
UBS Global Wealth Management’s investment research team is on top of this, pointing to space as one of the top opportunities for investors over the coming years.
The team has estimated that the $340billion space economy is ‘reaching an inflection point’ and is poised to triple to $1trillion over the next two decades.
The solid rocket boosters of SpaceX’s first Falcon Heavy rocket landing at the Kennedy Space Center in Florida
The tech involved is split into two main categories, the satellites of various kinds that are put into space, and the rockets that get them up there.
Space ships to travel through the solar system and beyond will one day be on the way but Elon Musk’s Mars ambitions notwithstanding this still sits more on the side of science fiction than investable opportunity, so it’s mainly satellites and rockets for now.
The UBS team sees the progress being made by SpaceX as a ‘significant milestone for the commercialisation of space.’
The team also points out that SpaceX is just one of several private companies at the forefront of what it dubs a ‘new private space economy’ which will offer opportunities for investors.
Low earth orbit internet satellites, which in due course will make high speed internet available anywhere on the planet, are an example of a technology which is going to see a boom, according to UBS.
The bank also notes that America’s NASA has been tasked with returning to the moon by 2024, and this will require ‘significant government investment and spending.’
Billionaire SpaceX founder Elon Musk is at the forefront of the new space race
Much of this money will find its way to private companies providing the tech required to make it happen.
So how can you invest in the space race yourself?
This is far from straightforward at this point. The issue is that much of this work and investment is being done in the private arena, by unlisted companies.
You can’t simply buy a chunk of shares in SpaceX, or Bezos’ Blue Origin. At least not yet.
The ways to move broadly into this area for retail investors include buying into listed aerospace or satellite maker stocks, investing in technology funds that target these areas, or a snapping up shares in a private equity investment trust that has these sort of companies within its portfolio.
Satellite-powered internet service is one sub-category of the new space race
While there are not any dedicated ‘space race’ funds yet available to retail investors it seems only a matter of time though.
There are already plenty of funds targeting particular global trends, such as AI or the rise of robotics, so space and rocket technology funds look likely to appear.
The issue with such funds would be the same as with AI and other specialisms. Namely, how effectively does the fund provide exposure to the rise of the technology in question.
Calling something an AI or space fund is one thing, truly being it is another so plenty of research and due diligence will be crucial.