This new ETF gives you broad exposure to growing financial technology sector
ETF provider Source has launched UCITS (Undertakings for the Collective Investment of Transferable Securities) fund focused solely on financial technology (“fintech”) companies. The Source KBW NASDAQ Fintech UCITS ETF aims to track the KBW NASDAQ Financial Technology Index, which captures fintech companies publicly listed in the US. Fintech is one of the biggest growth stories of the century so far but, until now, there hasn’t been an easy way to get broad exposure.
New research carried out by Source reveals that nearly half (46%) of institutional investors anticipate 2017 being a record year for investment in the fintech sector, but the same percentage said a lack of investment vehicles is a hindrance to getting more exposure to it.
The index currently has 50 constituents, from household names such as Paypal and Visa to newer entrants like point-of-sale payment app Square, with market capitalisations ranging from under $1 billion to over $150 billion. The 50 companies are weighted equally to ensure performance comes from across the sector and is not dominated by the largest players.
Chris Mellor, Executive Director, Equity Product Management at Source, commented: “Fintech companies are reshaping every part of financial services, from consumer finance and payments to insurance and data processing. The growth of fintech accelerated after the financial crisis, when traditional financial services were under extreme pressure just as consumer behaviour was changing and technologies such as smartphones, cloud computing and big data were taking off. Faster, more efficient and more joined-up technology in the financial arena has driven stellar growth for fintech companies and this trend shows no sign of slowing.”
The financial services sector identified as being most at risk from fintech disruptors was consumer banking (59%). This was followed by payments (43%), financial advice (30%), foreign exchange (30%), asset management (27%), wealth management (20%) and life insurance (20%).