The ETF Pioneer Who Calls Narratives Before Wall Street

Andrew Shannon launched HACK, the first cybersecurity ETF, on November 4, 2014, approximately two weeks before the Sony breach linked to North Korea. He was around 29 years old at launch, and HACK was the only pure-play cybersecurity vehicle available when that breach occurred. Shannon began his career on the floor of the American Stock Exchange in 2007 as a lead market maker for global and international equity ETFs, a role that required estimating where foreign components would open during US trading hours when those markets were closed. He observed the 2007 to 2008 financial crisis from that floor, and a senior colleague told him he had never seen conditions like it either.

His early experience as lead market maker for the first coal mining ETF revealed investor demand for global thematic exposure, which he identified as a business opportunity. Reading ETF prospectuses became a key differentiating practice because most market participants avoid doing so. He notes that even between 2007 and 2010, industry participants claimed all ETF ideas had already been launched, yet new thematic ETFs continue to raise billions in record time. Shannon created the world's first junior silver ETF in November 2012, which reached approximately 6 billion dollars in assets at its peak, built on the logic that silver is a higher-beta play on gold and junior miners are a higher-beta play still on the metal.

After a dispute involving Pure Funds, Shannon concluded that owning proprietary ETF infrastructure was necessary before bringing future products to market. Despite a favorable court judgment in the Southern District of New York, the funds from that dispute were never recovered. Shannon notes that Pure Funds and NASDAQ were on the same side in that litigation, not adversaries. He built Procure with owned and operated infrastructure specifically to prevent a repeat situation where created funds could be taken away.

Shannon launched the UFO ETF through Procure to give investors exposure to the global space industry, co-developing the index with the former director of research from the Space Foundation. UFO requires at least 80 percent of the fund to focus on companies generating at least 50 percent of revenues from space, with many pure-play names generating 90 to 100 percent. He chose a passive index strategy over active management because personal stock-picking credibility was not established with investors, and he argues that a space ETF with the same holdings and correlation as existing aerospace and defense ETFs provides no new exposure. Key catalysts for the space industry inflection point included reusable rockets and a dramatic reduction in launch costs, with rideshare payload access now available for a couple hundred thousand dollars to just over a million dollars.

SpaceX is described as the biggest and most important player in the space industry based on milestones hit and customers served, spanning governments, militaries, and commercial customers. Shannon notes that some ETF companies held private SpaceX shares via SPVs and continued holding those SPVs even after SpaceX went public while still charging high fees, whereas UFO bought SpaceX shares directly after the IPO and holds the publicly traded ticker. SpaceX is expected to go public at a valuation of 1.5 trillion dollars, and Shannon argues that by the time retail investors gain access to formerly private companies at that stage, much of the value creation may already have occurred. He also raises the question of whether SpaceX's preference for vertical integration means it would replace or acquire its suppliers rather than sustain them.

Shannon frames the current space race as having two dimensions: a race for low Earth orbit slots and a race among nations for space superpower status. The FCC requires satellite constellation operators to launch roughly half their satellites within the first couple of years of approval or risk losing future launch rights, putting significant pressure on Amazon's Project Kuiper. The Ukraine-Russia conflict placed space front and center in geopolitical strategy, with Maxar satellite imagery showing Russian troop buildup before the invasion, and Russia subsequently jamming satellites and taking OneWeb satellites hostage at the Baikonur launch base. China announced a successful vertical rocket stage catch, indicating SpaceX competition is driving other nations. Shannon argues that winners of the space race over the next couple of decades could position themselves as leaders for multiple decades to come, with real strategic ramifications unlike the early space race, which he characterizes as more of a vanity project.

On policy, Shannon wants to see an incentive structure similar to opportunity zones that would direct US investor capital into early-stage defense tech, deep tech, space, and national security companies. He distinguishes between government incentivizing investors, which he supports, versus government picking specific companies and directing money at them, referencing Solyndra as a cautionary example of the latter. He argues that letting free markets operate without restraint can be economically beneficial in the short term but long-term damaging if competitors gain choke points, citing China and the offshoring of US manufacturing as an example.