June 30, 2018
The financial services industry already looks dramatically different than it did twenty years ago. Firms are hiring fewer analyst and traders and increasingly hiring more software engineers. The industry is predicted to continue in this trajectory as we place more trust in code rather than on human analytics. Fintech is also improving customer satisfaction and reducing barriers to entry in investing in age-old industries like real estate.
The Fintech ETF
In 2016, the Global X FinTech ETF, FINX made investing in the future of finance more easily accessible. The ETF follows the Global Fintech Thematic Index. The index is designed to track the performance of companies in developed markets offering technology-driven financial solutions primarily in the financial services and banking sectors.
The future of Fintech looks bright. This is directly reflected in the performance of FINX as it increased in value 48% in just the last 12 months while traditional financial ETFs are up just 13% according to MarketWatch.
The FINX ETF contains 31 constituents or individual stocks. Firms that focus on data processors and application software represent about 80% of the fund.
As of June 2018, the ETF had just over $202.19 million in managed assets, over 50% of which flowed into the fund just this year.
ETFs as a Safe Bet
ETFs are some of the safest investments people can make in the stock market. The risk of one stock gets mitigated by the performance of the entire fund. Most non-financial professionals hear about Fintech in the media but don’t know how to participate. After all, most of the startup investment occurs at the VC level in Silicon Valley. FINX is one way to make a relatively low-risk investment in one of the fastest growing global industries.