5 Fintech ETFs to Watch Out For This Year
The fintech industry has a lot of long-term potential for investors. Fintech ETFs can be a great opportunity to grow your wealth and diversify your portfolio. Before we dig into the top funds, let’s take a look at the fintech sector.
What Is Fintech?
Financial technology (fintech) describes new technology that can improve financial services. Fintech companies often use mobile devices to connect people with financial services.
Innovations in the fintech space have changed the way we see our finances. These include payment apps, peer-to-peer (P2P) transfers, digital wallets and cryptocurrencies. Big banks and other institutions allow some of these things but are slow-moving. New companies and technologies are expanding rapidly.
Today, we can use these new technologies to improve our lives. Online payment apps like PayPal, Square’s Cash App, Apple Pay and Venmo have taken over traditional banking and payment transfer services. With this in mind, let’s take a look at the top fintech ETFs in 2021…
Top Fintech ETFs for 2021
- Global X FinTech ETF (Nasdaq: FINX)
- ARK Fintech Innovation ETF (NYSE: ARKF)
- Ecofin Digital Payments Infrastructure Fund (Nasdaq: TPAY)
- ETFMG Prime Mobile Payments ETF (NYSE: IPAY)
- Amplify Transformational Data Sharing ETF (NYSE: BLOK)
Let’s take a look at these ETFs in more detail…
Fintech ETF Highlights
Global X FinTech ETF
Expense Ratio: 0.68%
This fund invests in companies on the leading edge of the financial technology sector. These companies transform industries like insurance, investing, fundraising and third-party digital lending.
This ETF is the oldest and most established on this list. It has been publicly traded for over three years. It tracks the Indxx Global Fintech Thematic Index. This index covers companies involved in mobile payments, P2P and marketplace lending, and alternative currencies. Some of the company’s top holdings are Square (NYSE: SQ), AfterPay (OTC: AFTPY), and PayPal (Nasdaq: PYPL).
ARK Fintech Innovation ETF
Expense Ratio: 0.75%
ARKF is ARK’s fintech innovation ETF. This fund seeks long-term growth of capital. The fund invests in companies that are positioned around mobile payments, digital wallets and blockchain technology. A company fits ARKF’s investment theme if…
- It derives a significant portion of its revenue or market value from the theme of fintech innovation
- It has stated its primary business to be in products and services focused on the theme of fintech innovation.
Like the ETF listed above, this fund’s top holdings include Square and PayPal. Other top holdings include Shopify (NYSE: SHOP), Zillow (Nasdaq: ZG) and Pinterest (NYSE: PINS).
Ecofin Digital Payments Infrastructure Fund
Expense Ratio: 0.40%
Similar to the two above, this fintech ETF also focuses on digital payments. The fund tracks the total return performance of the Ecofin Global Digital Payment Infrastructure Index.
TPAY invests in companies that are engaged in the digital space. It offers exposure to new forms of digital payment like mobile, point-of-sale devices and P2P engines. This fund invests in companies that’s primary business includes…
- Credit card networks
- Digital transaction processing
- Credit card issuing
- Digital payment processing software
- Online financial services.
The fund’s top holdings include Discover (NYSE: DFS), American Express (NYSE: AXP), Fidelity (NYSE: FNF) and Visa (NYSE: V).
ETFMG Prime Mobile Payments ETF
Expense Ratio: 0.75%
This fund invests in companies shifting from physical cards and cash transactions to digital systems. It tracks the price and yield performance of the Prime Mobile Payments Index.
This index brings exposure to the mobile and electronic payment industry. Specifically, it tracks the performance of companies that…
- Engage in providing payment processing services or applications
- Provide payment solutions
- Build or provide payment industry architecture, infrastructure or software
- Provide services as a credit card network.
This fintech ETF’s top four holdings are American Express, Visa, Fidelity and MasterCard.
Amplify Transformational Data Sharing ETF
Expense Ratio: 0.71%
This fund invests in companies involved in the development and use of blockchain technology. It does not track an index. Instead, this fund invests in a mix of growth and value stocks. They come from different industries and lead in blockchain-based data sharing technologies.
BLOK’s top holdings include MicroStrategy (Nasdaq: MSTR), PayPal, Square and Voyager Digital (OTC: VYGVF). This fund also invests indirectly in Bitcoin through the Bitcoin Investment Trust.
The Final Line
The fintech sector is booming. While it has a promising future and continuous innovation, returns are never guaranteed. There are always risks with investing, and you should do your own research before making an investment.
If you’re interested in other fintech opportunities, check out the best fintech stocks for 2021. Also, feel free to sign up for the free Liberty Through Wealth e-letter below. It’s packed with investing tips and tricks. Whether you’re a beginner or more advanced, there’s something for everyone.