How do you compare space funds? Do you look over the funds landscape and apply their templates to space, but how to differentiate between Space Mutual Funds, Space Index Funds, Space VC funds, and is there really a Space Exploration Fund? What are they offering? What do you want?
There are a few answers but starting from a different position, and none of them are surprises:
- Management Fees, please. The ARK Space Exploration Fund is more top-heavy in aerospace and robotics than actual space, so you really have to check what they invest in, because performance aside, you’re paying them regardless if they go or down for managing a portfolio that you could easily build yourself.
- Portfolio Strategy: The networks behind raising capital, and who gets how much, and why, and when, will never be truly revealed. But who gets funded, well, they’re funded! They get to survive. If you build a portfolio of space companies to a strategy based on practical reality, rather than pure speculation, that’s a start. So far Seraphim is ticking the right boxes in terms of strategy, with Space Ventures Investor at an early stage.
- Roll with the Markets. How a space fund survives the trials and tribulation of Mr Market, plus chopping and volatility of space (a subset of the high-volatility tech-sector), is important. Note: Most funds, and the management and advisors of a listed company, are setup by those who are masters of funds and IPO, meaning if a space fund or space share fails, they have got their get-of-jail cards kept in their top drawer within easy reach. Although this is a skin-in-the-game question too, how they survive the game and do they want to go down with a sinking ship to have to save it later (as many founders go through multiple times) is a clue to how your investment will fair.
- Most fund structures are based on being their for the pension funds, as somewhere safe and secure to invest in. Space is not really fitting their agenda unless those who hold the purse strings at pension funds can navigate space investing with a long-term investing approach, e.g. space mining, there are a few players that actually map out how it will make money, but when it does, it can be a nice royalty stream in two decades, just as you’re settling into retirement and 100 years of currency debasement has eaten away your savings. You need to top up, but from where!
- Space Funds for speculation, hedging, or planning a future? This is about your strategy, and when mixing funds and space like a teenager opening a liquor cabinet, you have to have a feel for what’s good for you, and what won’t work. Example: A Space Exploration Fund is intoxicating, but if managed well, it will lead to a pay-off in the future. A Space VC Fund, while cool to name drop at dinner parties, relies on the nature of the venture capital: Are they just speculating, on what? Or are they investing 80% in vague space tech (which can be anything listed with a Wall Street rating) or cutting edge space start-up that needs to fund to break-out?
Conclusion: Space investing is still nascent, and will evolve, and like any sector, your money needs your time to find the right stock, or fund, or mission.