The use of digital payments increased during the pandemic, and data from Finaria suggest that the industry could reach over $6 trillion by the end of 2021. This could certainly benefit fintech-focused funds like the Global X FinTech ETF (FINX).
“The global digital payments industry has seen many innovations over the past few years, including mobile wallets, P2P mobile payments, real-time payments and cryptocurrencies,” a CPA Practice Advisor article pointed out. “This new, simple-to-use, cashless payment methods have drawn many users.”
Now big tech companies are taking notice. Social distancing measures are only proliferating the need for consumers to pay for goods and services without cash.
“Large players like Amazon, PayPal, Apple, and Facebook are continually investing significant amounts of money into online and mobile payment solutions,” the article said. “The ongoing development from separate online shops towards integrated online shopping ecosystems has created space for new business models and opportunities for digital payment methods.”
FINX seeks to provide investment results that correspond to the Indxx Global Fintech Thematic Index. The 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.
The fund gives investors exposure to:
- High Growth Potential: FINX enables investors to access high growth potential through companies that are applying technological innovations to disrupt and improve delivery of financial services.
- An Unconstrained Approach: FINX’s composition transcends classic sector, industry, and geographic classifications by tracking an emerging theme.
- ETF Efficiency: In a single trade, FINX delivers access to dozens of companies with high exposure to the fintech theme.
FINX Outperforming with Strong Holdings
As the financial technology space continues to grow at a remarkable pace, it’s already outperforming broad financial sector indexes like the MSCI ACWI Financials index. FINX is up 47% the past year. The MSCI index is faltering, at a 1.27% loss within that same time frame.
FINX’s strong performance can be attributed to what’s under the hood. Its top three holdings in Square Inc, Afterpay Ltd, and Adyen NV account for over 20% of the fund’s assets.
Afterpay Ltd leads the trio with a gain of over 300% the past year. That isn’t to say the other two are languishing, with Square up over 190% and Adyen shooting 130% higher.
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