Three Fintech ETFs to Buy and Hold

Fintech companies are the bridge that allows most of the general public access to cryptocurrencies such as Bitcoin.  Alternatively, they are also key players in this current age of digital finance.  Whatever way you cut it, the fintech industry is becoming more essential and is here to stay for the long run.

Even after the growth of the cashless payments space in recent years, the majority of payment transactions around the world are still done in cash.  The potential of fintech is pretty exciting.  

Whenever you have a high-growth and relatively young industry, it can seem intimidating to try to choose one or two stocks to invest in.  An alternative that lets you profit from the fintech boom without having to pick individual stocks is an ETF.

In this article we’ll take a look at three Fintech ETFs to consider for long term investors who want exposure to companies with excellent growth potential, without the risk of choosing just one or two companies.

Global X Fintech Thematic ETF (FINX)

FINX tracks a market-cap-weighted index of companies in developed markets that derive significant revenues from providing financial technology products and services.  The investment seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Indxx Global Fintech Thematic Index. The fund invests at least 80% of its total assets in the securities of the underlying index. 

FINX charges a reasonable fee for its cross-sector exposure to the emerging FinTech—financial technology—theme. FINX is comprised of stocks, in developed markets, with significant exposure to at least one of six FinTech themes: mobile payments, marketplace lending, crowd funding, enterprise solutions, blockchain and alternative currencies, and personal finance software and automated wealth management services. Since the stocks straddle the line between financials and technology, they can benefit from but are also susceptible to sector-wide shocks to either sector. Since FINX holds some foreign stocks, investors should expect some persistent premium or discount. The fund is non-diversified.

Global X Fintech Thematic ETF (FINX)

• Weighted Average Market Cap    $47.14B
• Price/ Earnings Ratio                    151.34
• Price/ Book Ratio                          7.31
• 52-week Performance                  +100.58%
• YTD Daily Total Return                 -0.36%
• Yield                                              N/A
• Expense Ratio (net)                      0.68%
• Net Assets                                    1.24B
• Number of Holdings                      40
• Top Holdings                                 Square (SQ), Afterpay (APT.AF), Adyen (ADYEN)

ARK Fintech Innovation ETF (ARKF)

Cathie Wood’s ARKF is an actively-managed ETF that follows the theme of Innovation in Financial Technology, which the issuer defines as “the introduction of a technologically enabled new product or service that potentially changes the way the financial sector works.”  Some examples of such applications are transaction innovations, blockchain technology, risk transformation, frictionless funding platforms, customer facing platforms, and new intermediaries.  For this specialized active exposure ARKF charges a fee on the higher side.

The investment seeks long-term growth of capital. The fund is an actively-managed ETF that will invest under normal circumstances primarily (at least 80% of its assets) in domestic and foreign equity securities of companies that are engaged in the fund’s investment theme of Fintech innovation.  A company is deemed to be engaged in the theme of Fintech innovation if (i) it derives a significant portion of its revenue or market value from the theme of Fintech innovation, or (ii) it has stated its primary business to be in products and services focused on the theme of Fintech innovation.  The fund is non-diversified.

Overall this is a great ARK fund to buy if you want some of those legendary Cathie Wood gains but aren’t ready for a rollercoaster ride of volatility.

ARK Fintech Innovation ETF (ARKF)   

• Weighted Average Market Cap    $242.43B
• Price/ Earnings Ratio                    174.98
• Price/ Book Ratio                          9.57
• 52-week Performance                  +151.27%
• YTD Daily Total Return                 7.11%
• Yield                                              0.33%
• Expense Ratio (net)                      0.75%
• Net Assets                                    95.32M
• Number of Holdings                      43
• Top Holdings                                Square (SQ), Paypal (PYPL), Zillow Class C (Z)

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The Ecofin Digital Payments Infrastructure Fund (TPAY) 

TPAY provides a straightforward take on digital payments infrastructure firms.  For funds offering themed exposure, defining the universe is a key step in the process.  TPAY’s index uses a revenue screen of 50% or greater in its specified industries: Credit Card Networks , Digital Transaction Processing, Credit Card Issuers, Digital Payment Processing Software and Online Financial Services. . Firms can be large-, mid- or small-cap and must be listed on an exchange in a developed market.  The ETF makes applies some liquidity screens but makes no attempt to “pick winners” within the space. Stocks are market-cap-weighted, subject to a 4.5% cap in any one name. 

The fund will normally invest at least 80% of its net assets in global digital payments infrastructure companies (“Digital Payments Companies”).  The underlying index is a proprietary rules-based, modified market capitalization weighted, float adjusted index designed to track the overall performance of equity securities of Digital Payments Companies listed on developed country exchanges.  It excludes stocks listed in emerging markets. 

Prior to the merger with Ecofin on August 21, 2020, the fund name was Tortoise Digital Payments Infrastructure Fund. 

The Ecofin Digital Payments Infrastructure Fund (TPAY)

• Weighted Average Market Cap    $72.08B
• Price/ Earnings Ratio                    62.16
• Price/ Book Ratio                          5.02
• 52-week Performance                  +75.4%
• YTD Daily Total Return                 -0.50%
• Yield                                              0.23%
• Expense Ratio (net)                      0.40%
• Net Assets                                    11.28M
• Number of Holdings                      51
• Top Holdings                                 Afterpay (APT.AX), PayPal (PYPL), Discover (DFS)

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