Seraphim New Space UCITS ETF is launched in Europe today, listing on the London Stock Exchange under a dollar share class of SPCE and a sterling share class of SERA.
The SERA ticker will also be used on the Borsa Italiana in Milan, while on Zurich’s Xetra it will trade as S3RA.
At the heart of the new Dublin-domiciled exchange traded fund is the VettaFi Seraphim New Space Index, which it will charge investors 0.75% a year to track.
This is a high total expense ratio compared to other index trackers, whose average TER last year was 0.22% to 0.35% according to Lipper Alpha Insight. That tells you that this is no ordinary benchmark, based as it is on Seraphim Space’s proprietary methodology built up over a decade of investing in more than 150 space tech companies across the world.
Designed in partnership with VettaFI, a US index company owned by TMX Group, the Canadian financial services group and owner of the Toronto Stock Exchange, the benchmark grades listed space tech companies with market values above $500m and average share trading volumes over $500,000.
Companies are awarded a theme score up to 500 based on six elements:
- future growth trajectory;
- innovation and impact;
- business model attractiveness;
- whether their space activities are focused on the US or Europe;
- extent to which their space operations are aligned with defence, big tech and the in-space economy;
- and how far they are involved in “New Space”, high-growth companies delivering innovative low-cost, cutting-edge technologies and services (as distinct from legacy aerospace and defence incumbents).
Companies that score over 300 make up a tier one category that accounts for 60% of the index. Those scoring between 200 and 300 go into a second tier that makes up 30%. The remaining 10% is allocated to Seraphim Space (SSIT), the manager’s £444m investment trust flagship which mainly invests in unlisted space tech start-ups, which has returned an impressive 332% in a three-year recovery from 2023 lows.
As we reported yesterday, the index starts with 23 companies. Including SSIT, the biggest holding, the top 10 accounts for 68.9% of the benchmark.
Second-placed, after the investment trust, is SpaceX (SPCX), whose record $1.7trn flotation in June galvanised investor interest in the sector. It gets an 8% allocation in the index and fund, and is followed by: Voyager Technologies (VOYG) 7.4%; HawkEye 360 (HAWK) 7.2%; AST SpaceMobile (ASTS) 6.5%; BlackSky Technology (BKSY) 6.4%; Redwire Corporation (RDW) 6.4%; Firefly Aerospace (FLY) 6%; Intuitive Machines (LUNR) 5.2%; Amazon (AMZN) 3.4%.
These are all US-listed companies which is why the index has a total US weighting of 73.5%. The UK gets 12.5%, primarily made up by SSIT, followed by Japan at 9.3%, Poland 2.4% and Sweden 2.2%.
Mark Boggett, chief executive of Seraphim Space, said: “Old Space put humans on the Moon. New Space is building the commercial infrastructure of the global economy. The convergence of AI and space tech, together with rising demand for connectivity, defence and sovereign capability, is creating one of the most compelling investment opportunities of the coming decade.
“Until now, investors have had limited ways to access that opportunity through public markets. At Seraphim, we have spent more than a decade investing across the space tech ecosystem, from early-stage companies through to growth and public markets, and have used that specialist expertise to design the Seraphim New Space index.”
Hector McNeil, co-CEO of HANetf, the ETF platform helping to launch the fund, said: “Mark and the Seraphim team bring deep and proven expertise, while the inclusion of the Seraphim Space investment trust gives investors indirect exposure to parts of the sector that remain privately held. This makes the ETF a particularly differentiated offering within the market.”
Our view
David Batchelor, senior analyst at QuotedData, said: “Until recently, the listed space universe was relatively shallow and investors looking for exposure often ended up owning a mixture of specialist niche businesses and much larger aerospace and defence companies. A succession of IPOs, including HawkEye 360 and SpaceX, has changed that, with more expected to come.
“The VettaFi Seraphim New Space Index, on which the new ETF is based, has 23 constituents and deliberately favours businesses that it considers to be genuine ‘new space’ companies. This is an important distinction as these companies are much more commercial in their approach, versus the larger ‘old space’ companies – typically large aerospace and defence companies – that dominate traditional space indices. However, it also means accepting the potentially much greater volatility that comes with younger, capital-hungry businesses.
“For Seraphim Space investment trust (SSIT) shareholders, we see the new ETF, with its focus on listed businesses, as complementary to SSIT’s focus on private companies. SSIT’s manager thinks so too, which is why the new ETF has a fixed 10% allocation to SSIT.”
