Fintech ETFs offer a play on digital opportunities.
While consumer technology innovation sometimes gets the most attention, there’s a revolution going on in financial services and capital markets that is perhaps even more dynamic. And more importantly, it could offer a bigger dollars-and-cents impact on the economy of the future. Financial technology, or fintech, applications include mobile payments, blockchain technology and digital capital markets infrastructure that will help the 21st-century economy continue to thrive. It can be difficult to pick individual winners and losers in this high-octane industry, however, so for investors who simply want to play the field, here are seven fintech ETFs that offer exposure to high-tech innovation in high finance.
Ark Fintech Innovation ETF (ticker: ARKF)
The Ark family of ETFs has come into prominence thanks to the last few years of outperformance for its flagship fund, the Ark Innovation ETF (ARKK). But while the fintech-focused offering may not be as well-known as that more prominent fund, it offers a direct play on this innovative corner of Wall Street without some of the other consumer technology or biotech firms getting in the way. The fund boasts $1.5 billion under management, making it the largest fintech-specific ETF on Wall Street, with top shares including e-commerce platform Shopify Inc. (SHOP) and mobile payments platform Block Inc. (SQ), formerly known as Square.
Amplify Transformational Data Sharing ETF (BLOK)
While you may think the name of this fund isn’t very fintech-oriented, the ticker should give it away. BLOK is designed to offer investors access to about 50 companies involved in blockchain technology, as well as firms that offer indirect crypto exposure. That includes firms such as cryptocurrency exchange Coinbase Global Inc. (COIN), firms like Microstrategy Inc. (MSTR) that have their own corporate war chest invested heavily in Bitcoin, and various software and service stocks working blockchain applications across the digital economy.
Global X FinTech ETF (FINX)
The Global X FinTech ETF comprises 65 top innovators in the financial industry, and it is the oldest and most established fund on this list. With more than $880 million in assets and an inception date of September 2016, FINX is a legitimate ETF with a long history of providing exposure to fintech stocks. The tactics of this fund involve putting money behind “companies on the leading edge of the emerging financial technology sector,” according to Global X. The portfolio is global, though about two-thirds is based in U.S. stocks, and top holdings include TurboTax software parent company Intuit Inc. (INTU) and digital payments and billing solutions firm Fiserv Inc. (FISV), among others.
ETFMG Prime Mobile Payments ETF (IPAY)
Among the most interesting fintech investments out there, mobile payments companies as a group tend to make big headlines. And that’s for good reason, as some researchers estimate that “unbanked” mobile payments worldwide will hit nearly $500 billion well within a decade. With all that capital moving around outside of traditional finance, there’s a lot of potential in fintech solutions serving this need. The $800 million ETFMG Prime Mobile Payments ETF is a pure play on this corner of fintech, featuring major digital native platforms like PayPal Holdings Inc. (PYPL) along with traditional cashless powerhouses like Visa Inc. (V). The fund isn’t as broad as others on the list, with only about 50 holdings, but that focus could pay off in the long run.
Bitwise Crypto Industry Innovators ETF (BITQ)
This $123 million exchange-traded fund is a way for investors who are interested in cryptocurrencies and blockchain to get a direct play on publicly traded companies in the space. Though only about 30 stocks make up this ETF, the holdings include the top-listed firms on Wall Street, such as Bitcoin miner Riot Blockchain Inc. (RIOT) and institutional investment firm Galaxy Digital Holdings Ltd. (BRPHF), among others. If you’re most interested in crypto and blockchain among fintech offerings, BITQ could be worth a look.
Amplify Emerging Markets FinTech ETF (EMFQ)
With a mere $5.4 million in total assets, this Amplify fintech ETF is already worth flagging as higher risk because of its structure and lack of liquidity. But another red flag for investors is the fact that this fund is also focused on emerging markets that inherently carry more risk. That said, perhaps the greatest potential for fintech applications is in emerging markets where traditional banking systems aren’t mature and a wide number of consumers don’t have traditional checking or savings accounts, instead relying on smartphone apps and digital tools. EMFQ is a mishmash of stocks that operate in this space, including Turkish payments platform D-Market Electronic Services & Trading (HEPS) or Argentina’s Despegar.com Corp. (DESP). There is uncertainty here, and there’s sure to be red-hot competition, but the companies behind these technologies could really take off if the chips fall right.
iShares US Financial Services ETF (IYG)
This fund gets last mention because it is, in many ways, a play on traditional finance. However, it’s worth noting that despite all the brand-new technologies that have emerged in recent years, it is largely the big banks that are benefiting — either by imitating that innovation internally or by simply acquiring the small players that could become future threats. Case in point: In March, JPMorgan Chase & Co. (JPM) acquired cloud-based share plan management software provider Global Shares, a firm with $200 billion in assets under administration at present. Rather than see its wealth management operations disrupted by fintech offerings like this, JPM just rolled Global Shares into the fold. IYG has the biggest names on Wall Street as its holdings, and as such is also a kind of investment in fintech — even if it is an indirect one.
7 fintech ETFs to bank on in 2022:
— Ark Fintech Innovation ETF (ARKF)
— Amplify Transformational Data Sharing ETF (BLOK)
— Global X FinTech ETF (FINX)
— ETFMG Prime Mobile Payments ETF (IPAY)
— Bitwise Crypto Industry Innovators ETF (BITQ)
— Amplify Emerging Markets FinTech ETF (EMFQ)
— iShares US Financial Services ETF (IYG)
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7 Fintech ETFs to Buy Now originally appeared on usnews.com
Update 04/14/22: This story was published at an earlier date and has been updated with new information.
