ETF Securities taps the fintech revolution


Kanish Chugh

The marriage of financial services and technology – fintech – has been a huge source of business innovation in recent years, creating many highly successful disruptors. With the rise of Afterpay, Australians have had a front row seat of the disruptive potential.

Now leading ETF provider, ETF Securities, has launched an exchange traded fund that gives investors access to the major trends in fintech.

Launched today on Chi-X , as Australia’s first Fintech ETF, the ETFS Fintech & Blockchain ETF (Exchange Code: FTEC) invests in a portfolio of 75 developed market stocks chosen to reflect several sub-themes in the growing fintech sector.

These include decentralised finance; digital payments and point of sale; payments processing; financial data provider and analyser; finance and tax software; trading and capital markets; and crowdfunding and peer-to-peer lending.

Decentralised finance, using blockchain technology, is the strategy’s key theme. Up to 20 stocks of the 75 stock portfolio can be blockchain companies.

ETF Securities Head of Distribution Kanish Chugh says: “This is an exciting growth period for the ETF sector in Australia as investors look for varied exposures to investment megatrends, led clearly by the innovation in technology sector. We have seen a lot of fintech disruption already in the form of digital wallets, robo-advice, instant international money transfers and free share trading.

“With blockchain adoption looming, the world steadily turning cashless and the global payments infrastructure becoming standardised, there is much disruption to come.

“The financial services industry has the strongest expected uptake of blockchain of any industry. Cryptocurrencies have shone a spotlight on blockchain and its potential, which extends to potential uses such as the ‘tokenisation’ of assets and ‘smart contracts’. Other major fintech trends include wealth moving online, the rise of alternative credit and big data.

“We hope this ETF will meet the growing demand from investors who are seeking exposures to these trends,” says Chugh.

Chi-X, has a growing list of active managed ETFs and listed managed funds. The launch of FTEC marks the inclusion of first passive ETF on Chi-X.

Chi-X Australia Chief Executive Vic Jokovic says: “Chi-X is excited to partner with ETF Securities to launch FTEC. This is a significant product for Australian financial markets, and we’re pleased that ETF Securities selected Chi-X to provide Australians with the opportunity to invest in the cutting edge technologies underpinning the next phase of innovation in financial services.”

FTEC will track the performance of the Indxx Developed Markets Fintech and DeFi Index. For inclusion in the Index, companies must have market capitalisation of more than US$500 million.

Some of the companies in the FTEC portfolio include payments companies Visa, PayPal and Square, which are all heavily involved in the move to cashless payments, the growth of e-commerce and the application of big data to payments.

Accounting software company Xero, which is a world leader in the transition of accounting to the cloud, and Black Knight, a US company that is automating mortgage processing, are also in the portfolio.

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