The demand for convenience, digital services and technological advancements has led to rapid growth in the fintech sector. Thus, investing in fintech ETFs can be a strategic way to gain exposure to the fintech sector with appropriate portfolio diversification without investing in multiple stocks.
Given the industry context, let’s take a look at the fundamentally strong FinTech stock ETFs ARK Fintech Innovation ETF (ARKF), Amplify Transformational Data Sharing ETF (BLOCK) and the Global X FinTech ETF (FINX) to ride the wave of digital finance.
With the rapid evolution of technology with globalization of IT services, digital transformation, innovations in financial markets and evolution of e-commerce, the IT market is showing strong growth. Additionally, major trends such as cloud computing, blockchain technology, and fintech are accelerating the market. The information technology market is expected to reach $12.42 trillion by 2028, a growth of CAGR of 8.3%.
Furthermore, growing demand and increasing consumer preference for digital financial services is leading to significant growth in the sector. fintech market. Consumer demand for convenient, user-friendly, and mobile-centric financial solutions has led FinTech companies to create and deliver services such as digital payments, robo-advisors, and peer-to-peer lending, which are fueling the walk.
The fintech market is expected to reach $1.15 trillion by 2032, with notable growth. 16.5% CAGR. Part of the fintech industry the trends that will shape the American market in 2024 include open banking, artificial intelligence in fintech, buy now, pay later (BNPL), blockchain and cryptocurrency, and robotic process automation (RPA).
Blockchain technologies have transformed the FinTech landscape and are reshaping the entire financial ecosystem in the United States by providing unparalleled security and transparency in financial transactions.
Given the encouraging economic trends, let’s take a look at the fundamentals of strong fintech ETFs.
ARK Fintech Innovation ETF (ARKF)
ARKF is an actively managed equity fund following innovation in financial technology, defined by the issuer as the introduction of a new technologically enabled product or service to potentially change the way the financial industry operates. The fund invests in domestic and foreign equity securities of companies falling within this theme.
The fund has assets under management (Assets under management) of $854.10 million. Top ARKF holdings include Coinbase Global, Inc. Class A (COIN) with a weighting of 11.26%, followed by Shopify, Inc. Class A (SHOP) at 7.69%, and Block, Inc. Class A (SQ) and DraftKings, Inc. Class A (DKNG) at 6.71% and 5.59%, respectively.
The ETF has a total of 34 holdings, with its top 10 holdings accounting for 56.22% of its assets under management. ARKF’s expense ratio is 0.75%, higher than the category average of 0.37%.
ARKF has surged 7.1% over the past six months and 18.7% over the past year to close the latest trading session at $27.52. It has a beta version of 1.5. The net asset value of the fund was $27.56 as of July 26, 2024.
ARKF POWR Ratings reflect strong prospects. The fund has an overall rating of B, which translates to a Buy in our proprietary rating system. POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
ARKF has an A rating for trading and a B rating for buy and hold. Within the Tech Stock ETFs group, it is ranked #49 out of 119 ETFs.
To access all of ARKF’s POWR ratings, Click here.
Amplify Transformational Data Sharing ETF (BLOCK)
BLOK is an actively managed portfolio of global stocks with a focus on blockchain technology. The fund seeks total return by investing in companies developing transformational data sharing technologies, primarily focused on blockchain technology.
The fund has assets under management of $711.50 million. Its top holdings include Core Scientific Inc. (CORZ) with a weighting of 5.19%, followed by Galaxy Digital Holdings Ltd. (GLXY) with a weighting of 4.82%, and MicroStrategy Incorporated Class A (MSTR) and Coinbase Global, Inc. Class A (COIN) at 4.25% and 4.03%, respectively. BLOK has a total of 55 holdings, with the top 10 holdings accounting for 36.71% of its assets under management.
The fund has an expense ratio of 0.76%, compared to the category average of 0.58%. Over the past few months, BLOK fund inflows amounted to $4.02 million. Its beta is also 1.5.
BLOK pays an annual dividend of $0.34, which translates to a yield of 0.92% at the current price level. The fund’s dividend distributions have grown at a CAGR of 12.4% over the past five years.
BLOK has gained 32.6% over the past six months and 45% over the past year to close the latest trading session at $37. The fund has a net asset value of $37.30 as of July 26, 2024.
BLOK’s POWR Ratings reflect its strong outlook. The ETF has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
BLOK has an A rating for Trade and Peer. It also has a B rating for Buy & Hold. The fund is ranked 13th among 119 ETFs in the Technology Stock ETFs group.
To access all POWR ratings for BLOK, Click here.
Global X FinTech ETF (FINX)
FINX provides cross-sector exposure to emerging financial technology. The fund specifically includes developed market securities with significant exposure. It aims to hold up to 100 FinTech companies, selected and weighted by market capitalization. FINX tracks a market capitalization-weighted index of companies in developed markets.
With $281.60 million in assets under management, FINX’s top holdings are Fidelity National Information Services, Inc. (FIS) with a weighting of 6.85%, Fiserv, Inc. (FI) at 6.64% , and PayPal Holdings, Inc. (PYPL) and Intuit Inc. (INTU) at 6.03% and 6.01%, respectively.
The fund has a total of 65 holdings, with its top 10 holdings accounting for 52.90% of its assets under management. Its expense ratio is 0.68%, higher than the category average of 0.58%.
FINX has gained 6.8% over the past six months and 7.3% over the past year to close the latest trading session at $26.01. It has a beta version of 1.04. The net asset value of the fund was $4.84 as of July 26, 2024.
FINX’s strong fundamentals are reflected in its POWR Ratings. The fund has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
The fund has an A rating for trading and buy-and-hold. Of the 41 ETFs rated B Financial Stock ETFs group, FINX is ranked #21.
Click here to see all FINX notes.
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ARKF stock was trading at $27.37 per share as of Monday afternoon, down $0.15 (-0.55%). Year to date, ARKF is down -0.76%, compared to a 15.34% rise in the benchmark S&P 500 during the same period.
About the author: Rjkumari Saxena
Rajkumari began her career as a writer, but gradually moved into financial journalism, leveraging her business background. Fascinated by the interplay of business and economic changes in equities, she aspires to grow as an analyst. With a knack for simplifying complex financial concepts, his mission is to provide investors with information that leads to profitable decisions. More…