It’s not enough to simply keep up with the technology of today as the rate of reaching obsolescence is faster than ever with new disruptive innovations always in the works. For ETF investors who want to keep pace, they have to look at funds that focus on technology that seemed light years away via disruptive ETFs.
“The financial services industry is known for its technological prowess, and companies in other industries have implemented technologies that financial services has pioneered, such as blockchain,” a Nasdaq report noted. “But innovation is coming out of other industries — including telecommunications and gaming — that can be applied to Nasdaq’s business as well. To illustrate, the Internet of Things (IoT) is taking machine-to-machine communications, pioneered by financial services, to the next level in areas ranging from agriculture to supply chain management. GPUs used in gaming are enabling machine learning, which is being applied across all industries.”
One fund to take advantage of the internet of things is the Global X Internet of Things Thematic ETF (NasdaqGM: SNSR), seeks to provide investment results that correspond generally to the price and yield performance of the Indxx Global Internet of Things Thematic Index. The underlying index is designed to provide exposure to exchange-listed companies in developed markets that facilitate the Internet of Things industry, including companies involved in wearable technology, home automation, connected automotive technology, sensors, networking infrastructure/software, smart metering and energy control devices.
An All-Around Disruptive ETF Option
An all-around fund for capitalizing on disruptive tech options in 2020 and beyond include the ARK Innovation ETF (NYSEArca: ARKK). Disruptive technology is not relegated to certain sectors as it will permeate into all industries in some form or fashion–for example, augmented reality is technology comprised of digital images superimposed over the real world, and its use is primed to drive industry growth–industries like real estate and manufacturing are already putting the technology to use in a variety of ways.
ARKK is an actively-managed ETF that seeks to provide investors with:
- Exposure to Innovation: Aims for thematic multi-cap exposure to innovation across sectors.ARK believes the securities held in ARKK present the best risk-reward opportunities from ARK’sinnovation-based themes.
- Growth Potential: Aims to capture long-term alpha+ with low correlation of relative returns totraditional growth strategies and negative correlation to value strategies.
- Diversification: Offers a tool for diversification due to little overlap with traditional indices.It can be a complement to traditional value/growth strategies.
- Research:Combines top-down and bottom-up research in its portfolio management to identify innovative companies and convergence across markets.
- Cost Effectiveness: Provides a lower cost alternative to mutual funds with true active management in an Exchange Traded Fund (ETF) that invests in rapidly moving themes.
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