As companies across various sectors engage with and produce new services and technologies, the definition of sector investing is quickly evolving. Some exchange traded funds are ready to help investors tap those opportunities.
The SPDR Kensho Intelligent Structures ETF (NYSEArca: XKII), SPDR Kensho Smart Mobility ETF (NYSEArca: XKST) and SPDR Kensho Future Security ETF (NYSEArca: XKFS) may help investors focus on the potential growth opportunity in next-generation technologies. Those ETFs debuted in late 2017.
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.
The Kensho Smart Mobility ETF includes companies whose products and services are engaged in smart transportation, which includes the areas of autonomous and connected vehicle technology, drones and drone technologies used for commercial and civilian applications, and advanced transportation tracking and transport optimization systems.
Investing In Structural Shifts
XKII, XKST and XKFS tap into a theme known as the Fourth Industrial Revolution, which includes increased connectivity, artificial intelligence, robotics, new transportation methods and increased computing power, among other factors.
“These innovation catalysts are driving seismic changes, and their impact will be felt in almost every facet of our lives—from the cars we use, how we travel, what jobs we do, and how we generate power, to how long we live and the commercialization of space,” said Kensho’s John van Moyland in a discussion with State Street Global Advisors (SSgA). The economic impact of the Fourth Industrial Revolution, or this period of exponential innovation, and the New Economies it’s giving rise to, will be vast. Understanding the breadth and extent of this change is crucial, and it will help position investors for the future.
XKFS, which debuted in December, tracks companies involved with innovation behind future security, which includes the areas of cyber security and advanced border security, along with military applications like robotics, drones and drone technologies, space technology, wearable technologies and virtual or augmented reality activities. XKFS may provide a way to invest in those adapting to the future of warfare and national security, such as Aerojet Rocketdyne Holdings, Boeing, Orbital ATK, Mercury Systems and Teledyne Technologies, among others.
“We realized that traditional sector classification schemes may not be well suited for identifying the areas of exponential innovation, together with the companies driving it, that are the hallmark of the Fourth Industrial Revolution,” said van Moyland. “Most classification systems are better suited for describing more of a manufacturing-based economy where companies are categorized by function. But that is not how the world operates. Today, supply chains are interconnected and complex, and the way innovations are manifesting themselves is more through the end product.”
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