Among the many sectors and industries embracing disruptive technology themes is financial services. The Global X FinTech Thematic ETF (NasdaqGM: FINX) is one ETF that helps investors access the fintech boom.
FinTech allows financial firms to leverage cutting edge technology to reduce costs, improve decision making and risk controls, remove middlemen and enhance customer experiences. FINX is up nearly 23% year-to-date.
FINX targets companies on the leading edge of emerging financial technology industry, which includes a range of innovations that caters toward businesses engaged in insurance, investing, fundraising and third-party lending through unique mobile and digital solutions.
FINX’s roster includes exposure to mobile payments companies, such as Square Inc. (NYSE: SQ), peer-to-peer lenders and more.
“Square’s success is indicative of how critical payments solutions have become to small and medium sized businesses. From corner coffee shops to sophisticated ecommerce sites, it is table stakes for businesses to offer customers a variety of payments options that are safe and reliable. For all but the largest businesses, this service can be most efficiently provided by third party payments firms like Square, which in turn captures a percentage of the business’s total revenue,” according to Global X research.
FINX: A Thematic Approach
A thematic approach includes investments that stand to benefit from structural change driven by demographic and technological changes.
FINX is also a global ETF. In addition to the U.S., eight other countries are represented in the fund, including a small weight to China. Peer-to-peer lender Yirendai is one of the Chinese stocks in FINX.
“While Yirendai is just one peer-to-peer lending platform, it is representative of a broader trend in FinTech of utilizing scalable technology platforms to provide financial services to customers who previously were ignored by traditional financial institutions,” according to Global X. “This is most apparent in the emerging markets where the rising middle class has historically largely been deprived of small loans or wealth management solutions given a lack of scalable financial services.”
FINX charges 0.68% per year, or $68 on a $10,000 investment.
For more information on the tech sector, visit our technology category.