ETF filing highlights investment risk of unidentified aerial phenomena

There’s a new potential risk investors need to watch out for, and it’s out of this world.

Exchange-traded fund provider ProcureAM this week submitted a regulatory filing with the SEC citing a new unprecedented risk: unidentified aerial phenomena.

ProcureAM — which provides a space-themed ETF that trades under the ticker symbol UFO — added UAPs, defined as a “flying object that looks or moves unlike any known aircraft used by the U.S. or any foreign country” to the risks in its fund’s prospectus, “effective immediately.”

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The addition comes as the U.S. military has acknowledged unexplained events and confirmed the authenticity of certain images and videos that show unusual activity. A forthcoming military intelligence report addressing the phenomenon is expected this month.

“This is undoctored footage … and we don’t know what to make of it,” ProcureAM CEO Andrew Chanin said. “To me, that just screams risk, risk, risk.

“And in our world, risk disclosure is very important.”

The move to add the disclosures in a regulatory filing could be a first. After discussing it with partners, board members and legal counsel, ProcureAM decided it was a necessary step, Chanin said.

“I’m not aware of any financial product in the history of the world that has put out such a risk disclosure,” he said.

The Procure Space ETF is comprised of companies from around the world that get a majority of their revenue from space-related business activities and services. Up to 20% of the fund includes more diversified air space and defense names, Chanin said.

The ETF, which launched in 2019, has about $133 million in assets.

News coverage of possible UAP activity has not prompted fluctuations for the ETF thus far. Still, the company decided now was the right time to acknowledge the potential risks, Chanin said.

“Given that currently there is no identification of these observed phenomena, it is possible that UAPs could create unintentional or deliberate operational, data security, ‘cyber’ and other interference with the operation of satellites and other objects in space,” the company’s Wednesday filing states.

“Such activities could result in a significant adverse impact on the Fund’s securities, thereby causing the Fund’s investment in such portfolio securities to lose value and adversely affecting the Fund’s ability to fulfill its investment objectives,” it said.

Thematic ETFs tied to space exploration have been gaining traction with investors, according to Todd Rosenbluth, senior director of ETF and mutual fund research at investment research provider CFRA.

While these kinds of disclosures are not common, such risks could have broader implications.

“If there are indeed actual UFOs, the impact on financial markets would seem to impact more than just a thematic ETF, but broad market ones, too,” Rosenbluth said.

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