The CEO of FintekNews, Bill Taylor, is a long time Chicago floor trader and hedgie and writes several market-related pieces for FintekNews daily. One of his main features is his daily analysis of the KBW Nasdaq KFTX Fintech Index with a breakdown of the 50 stocks that comprise the index. FINALLY, a firm is now using the new index to launch an ETF, though, IRONICALLY, it’s a European firm. The utter irony of all this is that there are two US-based ETFs (both listed on the Nasdaq) which also track fintech, but use a European index and a NYC/New Delhi-based index for their underlying composition. Seriously? Neither has drawn significant assets to date, which is a shame, since the sector is ripe for the picking.
“Source has launched the Source KBW NASDAQ Fintech UCITS ETF (LON: FTEK) – Europe’s first ETF focused solely on the fast-growing financial technology (“fintech”) sector – on the London Stock Exchange. The Source KBW NASDAQ Fintech UCITS ETF tracks the equal-weight performance of 50 companies listed in the US who operate in the fast growing fintech sector.
The US dollar-denominated fund tracks the KBW NASDAQ Financial Technology Index, which captures the performance of fintech companies listed in the US. Fintech companies are defined as those that use technology to deliver financial products and services, such as payments, financial data, exchanges, internet banks, specialty lenders and software.
The index identifies firms that tend to have distributions which are nearly exclusively electronic, as opposed to traditional “bricks and mortar,” and their revenue mixes are predominantly fee-based. They leverage new assets such as advanced data aggregation and analysis, innovative technology, and creative thinking.Launched in August 2016, the index currently has 50 constituents, from household names such as Paypal and Visa to newer entrants like point-of-sale payment app Square. It tracks a range of market capitalizations, from under $1 billion to over $150bn.
Dr. Chris Mellor, Executive Director, Equity Product Management at Source, commented: “Fintech companies are reshaping every part of financial services, from consumer finance and payments to insurance and data processing…
…Although the fund has been initially listed on the London Stock Exchange, it may be rolled out on exchanges across Europe – including the Deutsche Borse, Borsa Italiana and SIX Swiss Exchange – in coming months.
The ETF is the first in Europe to track the fintech space; however, there are currently a few ETFs available in the US which follow this market.
These include the Global X FinTech Thematic ETF (Nasdaq: FINX), which tracks the Indxx Global FinTech Thematic Index and has a TER of 0.68%; and the PureFunds Solactive FinTech ETF (Nasdaq: FINQ), which tracks the Solactive FinTech Index and also has a TER of 0.68%.”