In the future, space is everything

In the future, space is everything

31 May 2021 from Mikael Syding

When the film Armageddon with Bruce Willis went to the cinema in 1998, I was an IT analyst at a major Swedish bank. Until then, "technology" was for me synonymous with software and hardware. "Software" included VR simulation, design support (CAD / CAM), databases, operating systems, accounting software, sales support, word processing software, spreadsheets and more. "Hardware" was largely limited to computers, storage, and network products.

"Space is the future, in the future it's all about space!", My colleague exclaimed after seeing the film. For me, it really broadened the view of what technology is. It dawned on me that e.g. vehicles and weapons can be counted as high-tech products with great growth and profit potential. In the end, I understood that, for example, rockets, satellites, bombs, jets, reconnaissance technology, mobile phones, space tourism and the ecosystem around computer games should of course all be included in the technology sector.

For me and my colleague, it was the Swedish defense company Saab aerospace, in collaboration with Bruce Willis and for that time impressive computer animations, that made us wake up. Sooner or later, the earth will simply be enough for humanity to continue to grow. Once the aerospace industry accelerates its rockets, it is beyond the Earth's atmosphere that the great growth and investment opportunities exist. There is still a long way to go until then, of course, but in the meantime, manufacturers of aircraft, reconnaissance equipment, satellites, propulsion systems, special materials have enough potential in and just outside terrestrial airspace.

Via its tracker certificate based on the Solactive Space Technology Index, Vontobel has made it easy to supplement its other technology investments, in e.g. e-commerce, software, IT consultants and computer / internet related hardware, with really forward-leaning advanced technology for the space age. Solactive's Space Technology Index contains 20 companies, which are reweighted twice a year to equal weight (ie 5 percent each). Right now, Virgin Galactic, Boeing, Loral Space and Sirius XM weigh the most in the index thanks to the best price development since the last reweighting. Viasat, DISH, Safran, Teledyne and Ball have the least weight due to underperformance, but soon they will all be re-weighted to 5 percent again.

Despite the high-tech elements and the potential in the really long term, there are several defensive elements in the composition. Many of the companies have the US military as a major customer, and due to growing geopolitical tensions as China's economy grows to catch up with the US, defense funding is not expected to be reduced, quite the contrary. Alongside companies in the more traditional but fast-growing technology sectors internet, games, software, computers and telephones, Vontobel's space tracker is an interesting complement. On the one hand, genuine high-tech with a universe like Total Available Market, on the other hand companies with the US Federal Reserve behind them when the US military is to defend the nation's interests when a new world order emerges. You can buy the index with both hands.

The index (“Solactive Space Technology Index”) is a performance index calculated by Solactive AG, which means that dividends are reinvested in the index on a net basis ("net total return"). Through tracker certificates like this, investors can participate almost one by one in the price increases of the underlying assets, but of course also in any price falls. The management fee is 1.20 percent per year and investors also bear the credit risk of the issuer (Vontobel). Note that the index is calculated in US dollars so as an investor you are exposed to changes in the exchange rate between US dollars (or a different currency of an index component) and the product currency (SEK).


@Mikael Syding

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This information is in the sole responsibility of the guest author and does not necessarily represent the opinion of Bank Vontobel Europe AG or any other company of the Vontobel Group. The further development of the index or a company as well as its share price depends on a large number of company-, group- and sector-specific as well as economic factors. When forming his investment decision, each investor must take into account the risk of price losses. Please note that investing in these products will not generate ongoing income.

The products are not capitalprotected, in the worst case a total loss of the invested capital is possible. In the event of insolvency of the issuer and the guarantor, the investor bears the risk of a total loss of his investment. In any case, investors should note that past performance and / or analysts' opinions are no adequate indicator of future performance. The performance of the underlyings depends on a variety of economic, entrepreneurial and political factors that should be taken into account in the formation of a market expectation.

06/12/2021 06:18:33


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