Disruptive technology is all the rage. Investors looking to get in on this pioneering strategy can consider ETFs like the ALPS Disruptive Technologies ETF (CBOE: DTEC).
DTEC tracks the Indxx Disruptive Technologies Index, which identifies companies using disruptive technologies across ten thematic areas, including Healthcare Innovation, Internet of Things, Clean Energy and Smart Grid, Cloud Computing, Data and Analytics, FinTech, Robotics, and Artificial Intelligence, Cybersecurity, 3D Printing, and Mobile Payments.
DTEC is a relevant consideration over the near-term, and over longer holding periods, because significant disruption is already happen in a myriad of industries.
“We can see this in the way people are behaving as employees (working from home), as students (online education), as consumers (e-commerce), when seeking entertainment (virtual events, e-sports), and when needing medical advice (e-medicine),” according to HSBC.
DTEC Puts the “D” in Disruption
Asset allocators and their clients are hearing more and more about disruptive growth, but harnessing the advantages of this investment style requires more than just prosaic approaches.
Fintech is fertile territory for disruption because many traditional banks were asleep at the wheel when it comes to developing the products and services offered by DTEC holdings. Those old-school institutions are now playing catch-up while DTEC holdings set the pace. Some of these companies are poised to become bigger parts of familiar benchmarks in the coming years, but DTEC is levered to that growth today.
As technology advances and markets try to seek out the next big thing, investors can consider exchange traded funds that focus on disruptive innovations to capitalize on growing themes transcending old industries. DTEC’s exposure to automation and artificial intelligence is also a source of allure for investors.
“Some investors might still think of robots working on the assembly line when it comes to automation, but the technology is now driven by a mixture of robotics, artificial intelligence, and sensors,” reports Business Insider. “In addition to increasing the efficiency of the supply chain management process, automation can help retailers improve their customer experience. It will also continue to make a big difference to logistic operators, where only 5% to 6% of warehouses and factories are currently automated.”
DTEC holdings benefit from the shifting bases of technology infrastructure to the cloud, enabling mobile, new, and local services, such as companies that rely on or benefit from the increased use of shared technology, infrastructure, and services, internet-based products and services, new payment methods, big data, the internet of things, and social distribution and media.
Other technology funds to consider include the Technology Select Sector SPDR ETF (NYSEArca: XLK) and the Fidelity MSCI Information Technology Index ETF (FTEC).
For more on cornerstone strategies, visit our ETF Building Blocks Channel.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.