Swiss shop launches space economy fund to beat PM

Swiss boutique launches space economy fund for outperforming PM

Swiss asset manager BlueStar has launched the Blue Space fund to tap into the space economy, Citywire Selector has learned. The fund, which is launching with $20 million in seed capital from a bank and five family offices, will be led by top performer Juan Mallo, who will continue to co-manage the €70 million CB-Accent Lux BlueStar Dynamic fund. Giulia Comerio was appointed co-manager of the Dynamic strategy in 2021, to allow Mallo to focus on the launch of the Ucits-compatible space fund.

Mallo received a Citywire AAA rating in January and remains in the top quartiles of the mixed asset sector – Absolute Return over the past three years. However, it lost its rating in June. The management team will be supported by Exoplanet, a technological and scientific advisory company made up of aerospace physicists and engineers. As industry R&D improves, satellites are getting lighter and cheaper to develop, and more companies are willing to make the leap and invest in production to meet the growing demand for data. Traditionally funded solely by governments, private capital invested in the space economy is expected to continue to grow, following in the footsteps of Elon Musk’s SpaceX and Jeff Bezos’ Blue Origin.

Morgan Stanley research suggests the market could reach $5 billion by 2040 from $300 billion in 2016. Bank of America is more conservative in its projections, but believes the market will exceed 2, 5 billion dollars in the same period. Stargaze Speaking to Citywire Selector, Mallo is optimistic about the new release, although he is aware of the impact the current economic environment could have on investment decision-making. ‘In the first round of contacts, people were very impressed, because it is a little-known niche sector, and few people are aware of the high growth potential of the sector.

“We are aware that investor sentiment has changed due to volatility in financial markets. This could result in some delays in raising new money as investors deal with their asset allocation issues or negative returns and they’re probably not willing to add risk in the very short term.”We hope to convince them of this new opportunity for multi-year growth, which is somewhat independent of business cycles,” said Mallo (pictured below).

Seeking purity The Lugano manager said the portfolio will take 30 to 40 positions, covering mainly industrial, communications and technology sectors, from a broader list of around 80 companies. “We will focus on companies with high technology and financial scores, but also in what we call early-stage winners, because these are very innovative companies, which may have a bad financial score, but only because they are young companies and they need new investments.’ The portfolio will also target more established companies such as satellite operators and TV broadcasters.

“These aren’t that innovative, but they’re very strong from a financial standpoint, and they’re cashflowing today.” The fund will be classified as Article 6, excluding companies involved in controversial weapons. Mallo expects it to grow, but is determined to keep the fund’s asset base under control. “You have to be very critical of the purity of the target company. At the moment, this is an industry that does not allow managing a very large fund. If you get to $80-100 million, that’s enough. “If you have a $1 billion fund in this sector, means you’re going to have to include some companies that aren’t really related specifically to the space.”