Financial technology, fintech, has been a subsector in tech that’s already proven to be a disruptor in the way consumers are paying for goods and services. As such, there’s a growing interest in venture capital into companies that can create value in fintech, which took in $100 million during a pandemic-ridden second quarter.
“New data from CB Insights indicates that fintech startups raised a record number of so-called ‘mega-rounds,’ financings worth $100 million and more, in the second quarter of 2020,” a TechCrunch article noted.
“The same CB Insights report details a key ‘tailwind’ factor for many fintech startups, namely that e-commerce is booming in the COVID-19 era, rising from about 16% of total U.S. commerce to around 27% through Q2 of this year,” the article added.
Furthermore, fintech was a beneficiary of the pandemic as social distancing forced consumers to adapt to a new normal of digital reliance.
“Quarantine restrictions have raised the use of remote services—from online shopping to delivery, to entertainment, streaming services, and mobile payments,” an Entrepreneur article noted. “People accustomed to the advantages of the digital world are likely to keep using it actively in the post-COVID-19 period.”
Some 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.