Can the Coronavirus Actually Fuel Fintech ETFs? | ETF Trends

The coronavirus is no doubt giving businesses logistical challenges with a number of operations around the world having to shut down as a precautionary measure to contain the virus. However, the contagion could actually be fueling opportunities for fintech companies that can capitalize on the need for payment processing without consumers having to perform a transaction at a physical place of business.

Per a Finance Magnates report, “Doug Christensen, EVP of strategy at Tier1 Financial Solutions, told Finance Magnates that his company’s clients ‘are looking to potentially do more with technology, not less, as they think about the impact of servicing and managing their client needs and mitigating risk.’”

Christensen also said in the report that “as our clients put their Business Continuity Plans to test we expect to see more dependency on software solutions to stay informed and connected to service their end clients. As we look ahead–whether its Coronavirus drove change or some other market-moving consideration–we see a greater need for fintech solutions. […] Increased usage and reliance on technology is inevitable to remain competitive.”

As more people try to maintain distance between each other, they’ll need digital alternatives for cash, which presents an opportunity for fintech.

“Everyone is talking about this being a moment to switch to a cashless, cardless society,” said technologist Chris Skinner. “What we really need is for the world to move to mobile payments and facial recognition, like the payment services being rolled out in China.”

ETFs to look at in the growing fintech space include the Global X FinTech ETF (NasdaqGM: FINX) and the ARK Fintech Innovation ETF (NYSEArca: ARKF). ARKF invests in equity securities of companies that ARK believes are shifting financial services and economic transactions to technology infrastructure platforms, ultimately revolutionizing financial services by creating simplicity and accessibility while driving down costs.

ARKF Chart

ARKF data by YCharts

FINX 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 underlying index is designed to provide exposure to exchange-listed companies in developed markets that provide financial technology products and services, including companies involved in mobile payments, peer-to-peer (P2P) and marketplace lending, financial analytics software and alternative currencies, as defined by the index provider.

FINX Chart

FINX data by YCharts

Traders who want to leverage the strength in the financial sector can look to funds like the Direxion Daily Financial Bull 3X ETF (NYSEArca: FAS). As for FAS, the fund seeks daily investment results, before fees and expenses, of 300% of the daily performance of the Russell 1000® Financial Services Index.

On the opposite end of the spectrum, traders can opt for the Direxion Daily Financial Bear 3X ETF (NYSEArca: FAZ). FAZ seeks daily investment results that equate to 300% of the inverse (or opposite) of the daily performance of the Russell 1000® Financial Services Index.

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