ETF filing highlights the investment risk of unidentified aerial phenomena
There is a new potential risk to watch out for, and it is out of this world.
Exchange-traded fund provider ProcureAM filed a filing with the SEC this week identifying a new unprecedented risk: unidentified aerial phenomena.
ProcureAM – which offers a space ETF trading under the ticker symbol UFO – added UAPs, which are defined as “flying objects that look or move differently from any known aircraft in the United States or any other country,” to the risks in the US Prospectus of his fund prospect, “Effective immediately.”
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The addition comes because the U.S. military has admitted unexplained events and confirmed the authenticity of certain images and videos depicting unusual activity. An upcoming military intelligence report looking into the phenomenon is expected this month.
“This is unmanipulated footage … and we don’t know what to make of it,” said Andrew Chanin, CEO of ProcureAM. “To me it just screams risk, risk, risk.
“And in our world, risk disclosure is very important.”
The move to include the disclosures in a government filing could be a first. After talking to partners, board members and legal counsel, ProcureAM decided this was a necessary step, Chanin said.
“I am not aware of any financial product in the history of the world that has released such a risk disclosure,” he said.
The Procure Space ETF is made up of companies from around the world that derive a large part of their income from space-related business activities and services. Up to 20% of the fund includes more diversified airspace and defense stocks, Chanin said.
The ETF, which was launched in 2019, has assets of around $ 133 million.
Reporting on possible UAP activities has so far not caused any fluctuations for the ETF. Still, the company decided that now was the right time to acknowledge the potential risks, Chanin said.
“As there is currently no identification of these observed phenomena, it is possible that UAPs could cause unintentional or deliberate operational, data security, ‘cyber’ and other disruptions to the operation of satellites and other objects in space,” says the Announcement of the company from Wednesday states.
“Such activities could have a material adverse effect on the Fund’s securities, thereby depreciating the Fund’s investment in such portfolio securities and adversely affecting the Fund’s ability to achieve its investment objectives,” it said.
Thematic ETFs related to space exploration have become more popular with investors, said Todd Rosenbluth, senior director for ETF and mutual fund research at investment research provider CFRA.
While this type of disclosure is not common, such risks could have wider implications.
“If UFOs really do exist, the effects on financial markets seem to affect not just a thematic ETF, but a broad market as well,” said Rosenbluth.