Echiquier Space – this is the name of LFDE’s latest themed fund, which invests in companies that contribute to the space industry or benefit from its opportunities. The industry is at the beginning of a new era – the space industry 2.0. LFDE was the first European asset manager to set up an active investment strategy for this new topic with special consideration of ESG criteria. Given the growing number of space missions and technological developments, the space investment theme clearly offers a multitude of opportunities for innovation and progress.
Unexplored horizons with unprecedented potential
Advance into space is no longer reserved for states alone, but is now also firmly in the hands of private space companies. Space travel is a complex and at the same time exciting field, characterized by disruptive innovations, emerging high-tech companies and technological advances. With the transition from geostationary orbit to lower orbits and the use of new, reusable and therefore less expensive launch vehicles, space is becoming more and more accessible. In 2020 alone there was a record number of around 1,200 satellite launches. The private space travel market offers great potential for growth. According to a study by PwC and Bank of America Merrill Lynch, the size of the private space market is currently estimated at $ 400 billion and could reach around $ 2.7 trillion by 2045.
Space 2.0 brings advantages for all areas – whether telecommunications, precision agriculture, analysis of environmental change, insurance or industry. Echiquier Space aims to benefit from the numerous market opportunities offered by the new private space industry. The fund’s portfolio consists of around thirty stocks with a market capitalization of more than EUR 1 billion. By addressing a strategic and overarching topic that is particularly important in the long term, the Echiquier Space can invest in large parts of the global economy without investment restrictions for individual industries or regions.
Four subject areas in the focus of the Echiquier Space:
- In space: Satellites and satellite constellations and other space equipment
- Between earth and space: Transport to space and return to earth and communication solutions between these two areas
- On earth: Satellite construction, robotization and automation processes, operational operation of space stations, etc.
- Transversal Technologies: Space development activities such as connectivity, semiconductors and 3D printers
Own ESG charter specially developed for space travel
Due to its commitment to responsible investments, LFDE also ensures that preference is given to companies that make a contribution to a sustainable space economy with their products or services. For this purpose, an ESG charter was specially formulated for the challenges of space travel, in which fixed guidelines (such as no investment in defense companies) are anchored.
Echiquier Space focuses on companies that help make the space economy more sustainable and that strive to reduce its negative impact on the environment. It is ensured that the companies have environmental guidelines in place and take appropriate measures. If not publicly available, the target companies must discuss their strategy with regard to environmental issues and describe the management of their environmental risks. If a company does not provide sufficient information or if the strategy for its activity does not seem appropriate, an investment in this company will be refrained from.
Selection of companies with strict ESG requirements
Some companies in the space industry 2.0 develop technologies and business models that make a positive contribution to ecological issues. In connection with satellite data and images, the fund relies on companies that enable the observation and prediction of environmental and climate changes on earth. For example, satellites generate over half of the 50 observation parameters required to describe the climate system that were identified by the Global Climate Observing System for the United Nations Framework Convention on Climate Change (UNFCCC COP21). Satellites provide unique metrics that would otherwise not be available, such as on melting polar ice caps, sea levels, deforestation, natural disaster detection, etc.
Satellite technology also enables the optimization of logistics flows such as truck, air and ship traffic routes to improve the accessibility of remote areas, but above all to reduce CO2 emissions from transport.
Space 2.0 companies focus on the reusability of their equipment (especially missiles) to lower costs and prices while reducing the negative environmental impact.
The Echiquier Space counts on companies that use reusable launch vehicles, extend the life of satellites and develop new materials that use fewer resources and energy. Investments are also made in companies that collect data and use advanced analytics to improve operations and optimize resource consumption. Since space debris can also fall to Earth, care is taken to ensure that companies have adequate trajectory simulation tool capacity for debris and returning launch vehicles. Conversely, companies that manage the end of life of their satellites as well as space debris in general or take on the removal of the debris are valued.
The “S” in ESG: Overcoming the digital divide
Social issues also play a decisive role in Echiquier Space and are taken into account accordingly. For example, companies are preferred that promote better broadband access in remote areas (rural areas, islands in the ocean, etc.) to reduce the digital divide. Satellite imagery, in turn, can help combat censorship by increasing transparency regarding political events and possible human rights violations.
For example, after the recent military coup in Myanmar, the media were able to broadcast satellite footage of the protests in the country, even though the internet was almost completely off. Another striking example is the “Arab Spring”, in which the authorities in the affected countries censored the internet and in some cases even shut down the internet completely. Because of satellite technology, the world was able to follow events from space.
The space industry 2.0 is a major driving force behind research
The Space Economy 2.0 can enable breakthrough scientific discoveries in the sectors of technology, medicine, biology, etc. The potential for research on the International Space Station is enormous, because it is characterized by unique features – microgravity, special conditions such as extreme heat, cold cycles, ultra-vacuum, atomic oxygen and high-energy radiation – and its position in a low orbit. These unique framework conditions enable scientists to do research that would be unthinkable on Earth.
The space economy 2.0 is a new branch of the economy that contributes to economic development through the creation of new jobs, new knowledge and technology and fuels growth at the local, national and international level. In our opinion, the space industry 2.0 brings an immense surge in demand to certain industries and thus promotes overall economic growth through advances in physical and digital activities.
The stars stand for new growth impulses in space and the Echiquier Space offers investment opportunities without cutting back on ecological, social and governance criteria.
Would you like to reach for the stars too?
Contact LFDE here: [email protected]
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