Fintech
3 Fintech ETFs to Ride the Digital Finance Wave
The demand for convenience, digital services, and technological advancements has led to a rapid growth of the fintech sector. Therefore, investing in fintech ETFs can be a strategic way to gain exposure to the fintech sector with adequate portfolio diversification without investing in multiple stocks.
Given the industry context, let’s take a look at fundamentally sound FinTech equity ETFs ARK Fintech Innovation ETF (ARKF), Amplify Transformative Data Sharing ETF (BLOCK) and Global X FinTech ETF (THE FINAL) to ride the wave of digital finance.
With the rapid evolution of technology with globalized IT services, digital transformation, financial market innovations, and evolving e-commerce, the IT market is showing strong growth. In addition, major trends such as cloud computing, blockchain technology, and fintech are accelerating the market. The information technology market is expected to grow to USD 12.42 trillion by 2028, growing at a CAGR of 8.3%.
Furthermore, the growing demand and consumer preference for digital financial services are driving significant growth for the fintech marketConsumer demand for convenient, intuitive, and mobile-centric financial solutions has led FinTech companies to create and provide services such as digital payments, robo-advisors, and peer-to-peer lending, fueling the market.
The fintech market is expected to reach $1.15 trillion by 2032, recording significant growth CAGR of 16.5%. Some of the companies in the fintech sector Trends That Will Shape the US Market in 2024 include open banking, artificial intelligence in fintech, buy now, pay later (BNPL) services, blockchain and cryptocurrency, and robotic process automation (RPA).
Blockchain technologies have transformed the FinTech landscape and are reshaping the entire financial ecosystem in the United States, providing unparalleled security and transparency in financial transactions.
Given the encouraging economic trends, let’s dive into the fundamentals of the strongest fintech ETFs.
ARK Fintech Innovation ETF (ARKF)
ARKF is an actively managed equity fund that tracks innovation in financial technology, defined by the issuer as the introduction of a new technology-enabled product or service to potentially change the way the financial industry works. The fund invests in domestic and foreign equity securities of companies within this theme.
The fund has assets under management (AUM) of $854.10 million. ARKF’s top holdings include Coinbase Global, Inc. Class A (COIN) with a weighting of 11.26%, followed by Shopify, Inc. Class A (SHOP) at 7.69%, and Block, Inc. Class A (SQ) and DraftKings, Inc. Class A (DKNG) at 6.71% and 5.59%, respectively.
The ETF has a total of 34 holdings, with its top 10 assets comprising 56.22% of its AUM. ARKF’s expense ratio is 0.75%, higher than the category average of 0.37%.
ARKF has increased 7.1% over the past six months and 18.7% over the past year, closing the last trading session at $27.52. It has a beta of 1.5. The fund’s NAV was $27.56 as of July 26, 2024.
by ARKF POWR Ratings reflect a strong outlook. The fund has an overall rating of B, which translates to a Buy in our proprietary rating system. POWR Ratings are calculated using 118 different factors, with each factor weighted optimally.
ARKF has a grade A for trading and a grade B for buying and holding. Inside the Technology Equity ETFs group, is ranked 49th out of 119 ETFs.
To access all of ARKF’s POWR ratings, Click here.
Amplify Transformative Data Sharing ETF (BLOCK)
BLOK is an actively managed portfolio of global stocks focused on blockchain technology. The fund seeks total return by investing in companies developing transformative data sharing technologies, primarily focused on blockchain technology.
The fund has an AUM of $711.50 million. Its top holdings include Core Scientific Inc. (CORZ) with a weighting of 5.19%, followed by Galaxy Digital Holdings Ltd. (GLXY) with a weighting of 4.82%, and MicroStrategy Incorporated Class A (MSTR) and Coinbase Global, Inc. Class A (COIN) at 4.25% and 4.03%, respectively. BLOK has a total of 55 holdings, with the top 10 assets comprising 36.71% of its AUM.
The fund has an expense ratio of 0.76%, compared to the category average of 0.58%. In recent months, BLOK fund has had inflows of $4.02 million. It also has a beta of 1.5.
BLOK pays an annual dividend of $0.34, which translates to a yield of 0.92% at the current price level. The fund’s dividends have grown at a CAGR of 12.4% over the past five years.
BLOK has gained 32.6% in the last six months and 45% in the last year, closing the last trading session at $37. The fund has a NAV of $37.30 as of July 26, 2024.
BLOK’s POWR Ratings reflect its strong outlook. The ETF has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
BLOK has an A grade for Trade and Peer. It also has a B grade for Buy & Hold. The fund is ranked 13th among 119 ETFs in the Technology Equities ETFs group.
To access all POWR ratings for BLOK, Click here.
FinTech Global X ETF (THE FINAL)
FINX offers cross-sector exposure to emerging financial technology. The fund specifically includes developed market stocks with significant exposure. It aims to hold up to 100 FinTech companies, selected and weighted by market capitalization. FINX tracks a market capitalization-weighted index of companies in developed markets.
With $281.60 million in AUM, FINX’s top holdings are Fidelity National Information Services, Inc. (FIS) with a weighting of 6.85%, Fiserv, Inc. (FI) with 6.64%, and PayPal Holdings, Inc. (PYPL) and Intuit Inc. (INTU) with 6.03% and 6.01%, respectively.
The fund has a total of 65 holdings, with its top 10 assets comprising 52.90% of its AUM. It has an expense ratio of 0.68%, higher than the category average of 0.58%.
FINX has gained 6.8% over the last six months and 7.3% over the last year, closing the last trading session at $26.01. It has a beta of 1.04. The fund’s NAV was $4.84 as of July 26, 2024.
FINX’s strong fundamentals are reflected in its POWR Ratings. The fund has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
The fund has a grade of A for Trade and Buy & Hold. Of the 41 ETFs with a B rating Financial Equity ETFs group, FINX is ranked 21st.
Click here to see all FINX ratings.
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ARKF stock was trading at $27.37 per share on Monday afternoon, down $0.15 (-0.55%). Year-to-date, ARKF is down -0.76%, compared to a 15.34% gain in the benchmark S&P 500 index over the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay between business and economic changes in stocks, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to provide investors with insights that lead to profitable decisions. Moreover…