A Brief Explanation: Fintech ETF
Before listing the top fintech ETF, let us briefly explain what ETF means. ETF is an abbreviation for “exchange-traded fund” which is a kind of investment fund traded on stock exchanges. In other words, fintech ETFs are a collection of fintech stocks and bonds. Much similar to mutual funds, ETFs track a particular index. Since ETFs are traded on exchanges, they tend to be more cost-effective and more liquid.
Fintech ETFs are a basket of stocks and bonds of fintech companies. As the field of fintech is still young and evolving, investors may be more careful to hedge against potential losses. If they are comfortable with exchange trading, fintech ETFs can be a safe way to start exploring the industry.
Fintech is thriving and so is fintech ETF. The infographic above picks up top five fintech ETFs that you could consider adding to your portfolio. We will discover more about these fintech ETFs below.
Please note this content is for informational purposes only.
Amplify ETFs | BLOK and EMFQ
Amplify ETFs is one of the most recognized ETF investment firms with over $4 billion in assets under management. They offer EFTs in various categories such as lithium and battery tech and legal cannabis. And among them is fintech ETFs—BLOK and EMFQ.
BLOK or the Amplify Transformational Data Sharing ETF is an actively managed ETF that invests in companies involved in the development and utilization of blockchain technology and indirect crypto exposure. BLOK does not directly invest in blockchain technology; it seeks to identify the leading companies in the developing blockchain technology space across industries. As of May 2022, the net asset value of BLOK has grown by 7.88% annually since its inception.
Another fintech ETF they offer is EMFQ or the Amplify Emerging Markets FinTech ETF. EMFQ comprises equity securities issued by fintech companies in emerging and frontier market. The field of fintech has a great potential but can be risky at the same time. Needless to say, fintech in emerging and frontier market is more so—it can give higher returns but comes with higher risks. As of May 2022, the net asset value of EMFQ shrunk by 2.73% annually since its inception.
ARK ETFs | ARKF
Well known for ARK Innovation ETF ARKK, Ark launched ARK Fintech Innovation ETF (ARKF) in 2019. ARKF invests in equity securities of primarily US (at least 80%) and foreign fintech companies. These companies introduce products and services that potentially transform the financial sector with the use of technology. As of 2022 June, Shopify (SHOP) weighs 9.60% of the fund, followed by Block (former Square, SQ) at 9.32%.
ARKF seeks long-term growth of capital. Its net asset value grew. The net asset value of ARKF dropped by 1.43% annually since inception as of May 2022.
Global X | FINX
With up to $40 billion in assets under management across over 90 ETF products as of June 2022, Global X is one of the fastest growing ETF providers. The company is famous for Thematic Growth ETF (GXTG), which is a collection of equity securities that are predicted to generate above market returns in a long term.
Global X FinTech ETF or FINX comprises leading companies in the fintech sector across a wide range of industries such as insurance, investing, fundraising, and mobile and digital solutions. As of May 2022, the net asset value of FINX has increased annually 10.55% since inception.
ETFMG | IPAY
ETF Managing Group (ETFMG) is an innovative thematic ETF manager based in New Jersey. ETFMG offers a wide variety of ETF products including commodity, cannabis, mining, and technology.
The fintech ETF the company provide is ETFMG Prime Mobile Payments ETF (IPAY). IPAY is the first ETF that focuses on the mobile payments industry. Its holdings as of June 2022 include but not limited to: Visa Inc, Mastercard Inc, American Express Co, and PayPal Holdings Inc. The annualized performance of IPAY since inception is 9.46% as of May 2022.
iShares | IYG
iShares is the largest ETFs manager in the US, providing more than 900 products and over $3 trillion in assets as of 2021. It is managed by BlackRock, an American multinational investment management and a leading company in environmental, social and corporate governance (ESG).
iShares US Financial Services ETF (IYG) is not directly a fintech ETF; rather, it is a financial ETF. However, IYG‘s holdings include some of the big names in the fintech sector—Visa Inc, Mastercard Inc, American Express Co, Coinbase, Sofi Technology, Ally, Robinhood, and Upstart (as of June 2022). The net assets of IYG is over $1 billion as of June 2022. Its performance is 4.87% since inception as of May 2022.
Summing up: Fintech ETF
The fintech sector is booming; however, it is relatively new and still under development. Accordingly, investors may experience roller-coaster by investing in a specific fintech stock. On the other hand, fintech ETFs allow investor to invest in a diversified collection of equity securities, which potentially reduces risks and volatility.
