Fintech has been on a rise amid the coronavirus pandemic, which is forcing consumers to utilize digital payment options amid social distancing measures. Additionally, acquisition activity within the space could provide fuel for fintech exchange-traded funds (ETFs).
“With Covid-19 continuing to rise, many in the fintech world have pondered what impact the virus will have. While the crisis may be causing a down round in terms of new funding in the space, it doesn’t seem to be slowing down mergers and acquisitions,” wrote Scarlett Sieber in Forbes. “The epidemic may not even register as a blip to future analysts of fintech M&A.”
The month of June, in particular, saw some key acquisition activity within fintech.
“The second half of June saw the payments company Square acquire European peer-to-peer payments startup Verse, Mastercard acquires API provider Finicity, and Credit Sesame acquire the Canadian challenger bank Stack, to name a few,” Sieber added. “June also saw a surprising fintech IPO in Lemonade, the New York-based insurance startup. Lower profile but no less interesting was wealth startup Tegra118. Led by Fiserv veteran Cheryl Nash, acquiring Illinois-based RetireUp. All of these acquisitions are interesting for different reasons and collectively tell a story of where fintech is likely going moving forward.”
Fintech ETF Options
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.
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.
Another fund to take advantage of within financial innovation is the Goldman Sachs Motif Finance Reimagined ETF (GFIN). GFIN seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the Motif Finance Reimagined Index.
The fund seeks to achieve its investment objective by investing at least 80% of its assets in securities included in its underlying index. The index is designed to deliver exposure to companies with common equity securities listed on exchanges in certain developed markets that may benefit from the on-going structural changes in the support and delivery of financial services.
For more market trends, visit ETF Trends.