A growing number of ETFs offer investors avenues to playing disruptive themes in familiar sectors. Those products include the SPDR Kensho Intelligent Structures ETF (NYSEArca: XKII).
The Kensho Intelligent Structures ETF follows companies whose products and services are driving innovation behind intelligent infrastructure, such as smart building infrastructure, smart power grids, intelligent transportation infrastructure, and intelligent water infrastructure.
XKII, which debuted last December, follows the Kensho Intelligent Infrastructure Index. That index “is designed to capture companies whose products and services are driving innovation behind intelligent infrastructure, which includes the areas of smart building infrastructure, smart power grids, intelligent transportation infrastructure, and intelligent water infrastructure,” according to State Street Global Advisors (SSgA).
As companies across various sectors engage with and produce new services and technologies, the definition of sector investing is quickly evolving.
“Traditional revenue-based sector classification systems may not be well suited for identifying companies driving future innovation in the new economy, but Kensho’s indices are designed to capture not only the leading companies in each industry but also the entire ecosystem supporting them,” said SSgA in a recent note.
Inside XKII
XKII features exposure to over a dozen industry groups, many of which dwell in the industrial and technology sectors.
“The Kensho Intelligent Infrastructure Index goes beyond well-known traditional industrial firms by including companies involved in intelligent and connected home technologies, smart power grid technology, road sensors, traffic management infrastructure and smart water meters,” according to SSgA.
Data suggest XKII is at the forefront of some disruptive, long-term, wide-ranging investment themes.
“Using XKII, investors can amplify an existing sector exposure towards the future of infrastructure, a pressing need given that McKinsey estimates the world needs to invest $3.3 trillion annually in infrastructure to meet global growth forecasts,” said SSgA. “A lot of this spending is likely to go towards more innovative structures to drive efficiency and future productivity gains with our society.”
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