The demand for convenience, digital services, and technological advancements have led to rapid growth of the fintech industry. Thus, investing in fintech ETFs can be a strategic way to gain exposure to the fintech sector with suitable diversification of portfolio without investing in multiple stocks
Given the industry’s backdrop, let’s look at the fundamentally solid FinTech Equities ETFs ARK Fintech Innovation ETF (ARKF), Amplify Transformational Data Sharing ETF (BLOK), and Global X FinTech ETF (FINX) to ride the digital finance wave.
With the rapid evolution of technology with globalized IT services, digital transformation, financial market innovations, and evolving e-commerce, the IT market is showcasing strong growth. Further, major trends like cloud computing, blockchain tech, and fintech accelerate the market. The information technology market is expected to grow to $12.42 trillion by 2028, growing at a CAGR of 8.3%.
Further, the surging demand and rising consumer preference for digital financial services is driving significant growth for the fintech market. Consumers demand for convenient, user-friendly, and mobile-centric financial solutions has resulted in FinTech companies creating and delivering services like digital payments, robo-advisors, and peer-to-peer lending fueling the market.
The fintech market is expected to reach $1.15 trillion by 2032 exhibiting growth at a notable CAGR of 16.5%. Some of the fintech industry trends shaping 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 by offering unparalleled security and transparency in financial transactions.
Considering the encouraging economic trends, let’s delve into the fundamentals of solid fintech ETFs.
ARK Fintech Innovation ETF (ARKF)
ARKF is an actively managed fund of stocks following innovation in financial technology, defines by the issuer as the introduction of a technologically enabled new product or service to potentially change the way the financial sector 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 an 11.26% weighting, 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 surged 7.1% over the past six months and 18.7% over the past year to close 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.
ARKF’s POWR Ratings reflect solid prospects. The fund has an overall rating of B, translating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
ARKF has an A grade for Trade and a B grade for Buy & Hold. Within the Technology Equities ETFs group, it is ranked #49 of the 119 ETFs.
To access all ARKF’s POWR Ratings, click here.
Amplify Transformational Data Sharing ETF (BLOK)
BLOK is an actively managed portfolio comprising of global equities emphasized on blockchain technology. The fund seeks total return by investing in companies developing transformational data sharing technologies, mainly focused on blockchain technology.
The fund has an AUM of $711.50 million. Its top holdings include Core Scientific Inc. (CORZ) with a 5.19% weighting, followed by Galaxy Digital Holdings Ltd. (GLXY) at a 4.82% weighting, 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%. Over the past months, BLOK fund inflows came in at $4.02 million Also, it has a beta of 1.5.
BLOK pays an annual dividend of $0.34, which translates to a 0.92% yield at the current price level. The fund’s dividend payouts have grown at a CAGR of 12.4% over the past five years.
BLOK has gained 32.6% over the past six months and 45% over the past year to close 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 #13 among 119 ETFs in the Technology Equities ETFs group.
To access all the POWR Ratings for BLOK, click here.
Global X FinTech ETF (FINX)
FINX offers cross-sector exposure to the emerging financial technology. The fund specifically includes developed markets securities with significant exposure. It aims to hold up to 100 FinTech companies, selected and weighted by market-cap. FINX tracks a market-cap-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 6.85% weighting, Fiserv, Inc. (FI) at 6.64%, and PayPal Holdings, Inc. (PYPL) and Intuit Inc. (INTU) at 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 past six months and 7.3% over the past year to close 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 sound 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 an A grade for Trade, and Buy & Hold. Of the 41 ETFs in the B-rated Financial Equities ETFs group, FINX is ranked #21.
Click here to see all the FINX ratings.
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ARKF shares were trading at $27.37 per share on Monday afternoon, down $0.15 (-0.55%). Year-to-date, ARKF has declined -0.76%, versus a 15.34% rise in the benchmark S&P 500 index during 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 of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
3 Fintech ETFs to Ride the Digital Finance Wave StockNews.com
