A Fund for Fintech Investors

05/09/2019 5:00 am EST


Jim Woods

Editor, Successful Investing, Intelligence Report

Financial technology, as some might say, is too important to be left to the financiers. Indeed, it is hard to find a sector of the economy that hasn’t been touched by financial technology innovations, including the insurance, fundraising and third-party lending sectors, notes Jim Woods, editor of The Deep Woods.

The Global X FinTech ETF (FINX) offers prospective investors access to this dynamic sector of the economy.

Specifically, the ETF focuses on providing investment results that generally correspond to the price and yield performance, before fees and expenses, of the Indxx Global FinTech Thematic Index.

This approach is particularly salient because FINX can transcend sector, industry and geographical classifications. For example, FINX has holdings that are in North America (73%), Europe (17%) and the Asia-Pacific region (10%).

Some of this exchange-traded fund’s largest positions include PayPal Holdings (PYPL), SS&C Technologies Holding (SSNC), Intuit (INTU), Fiserv (FISV), Temenos Group AG-Reg (TMSNY), Square (SQ), Fidelity National Info SE (FIS) and First Data Corp. Class A (FDC).

While these companies are mainly in the technology arena (78%), this ETF has holdings in companies that are in the financial (11%), health care (3%) and other (8%) sectors, too.

The fund currently has $361 million in net assets and an average spread of 0.23%. It also has an expense ratio of 0.68%, meaning that it is more expensive to hold in comparison to other exchange-traded funds.

In terms of FINX’s MSCI ESG Fund Quality Score of 4.79, it ranks in the 17th percentile within its peer group and in the 28th percentile within the global universe of all funds in the MSCI ESG Fund Metrics coverage.

 This fund’s performance has been quite solid in the long term. While it only has been up 3.65% over the past month, it rose 14.94% over the past three months and remains up 29.88% year to date.

In short, while FINX does have several advantages over some of its peer funds and provides an investor with a way to pursue profits from some truly cutting-edge technology, this ETF’s risks and costs are not zero. Thus, interested investors should always do their due diligence and decide whether the fund is suitable for their portfolios.

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