What ETF Investors Need To Know About 3-D Printing
In addition to offering diversified exposure to traditional sectors of the market, ETFs can also allow you to tap into lucrative industries that may otherwise be too risky to access on their own. 3-D printing is one such industry that has captivated countless investors, and for good reason; this revolutionary technology promises to change how consumers and businesses behave, allowing customers to create their own products. However, this industry that has the potential to change everything has remained rather inaccessible for investors during its primary development [for more ETF analysis, make sure to sign up for our free ETF newsletter].
What Exactly Is 3-D Printing and Why Will It Change the World?
The principal concept of 3-D printing, also called Addictive or Rapid Manufacturing, is to create a solid object of virtually any shape from a digital model. This is achieved through the successive layering of materials to form the literal building blocks of an object. The most common material used in the building process is molten plastic which is quick to cool and solidify in order to maintain the desired shape.
While this relatively new technology has excited minds around the world and promises big changes, there are a couple of factors to consider: Rapid Manufacturing is actually not that new of an idea and has been in existence since the late 1980s, but the technology has only gained public traction in the last decade. While it is an important fabrication technology, it is unlikely that 3-D printing will replace modern manufacturing in the next few years. The machines, materials and software are still developing and probably will not be seen on a large scale for at least a decade. Even with these current limitations, investors have seen the potential in the technology and those looking to get into this growing industry have a couple of ETF investing options [also see Industrial ETFs Stay Strong After Weak ISM Manufacturing Data].
Which ETFs Are “3-D Ready”?
3D Systems Corp (DDD): This South Carolina is one of the original manufactures of 3-D printers, opening its doors in 1986. Selling both the software and machine to allow consumers to print, 3D Systems has found a niche market to command. While there are eight ETFs offering exposure to this firm, only one fund, PSCT, has a focus on technology companies.
Hewlett Packard Company (HPQ): This computer and printer manufacture has had its eye on 3-D printing for the last few years. While the main business has been suffering from poor sales and substandard development, this massive company has the ability to raise resources behind this new technology, and may soon do so. There are currently five ETFs with exposure to HP with MTK and SKYY holding the largest stakes [see S&P 500 Visual History].
Autodesk Inc (ADSK): NASDAQ 100 listed Autodesk is another one of the leading players in the 3-D printing sector. With over $2.21 billion in revenue in 2012, this quickly expanding group is most heavily involved in the software side of 3-D printing, but it’s not contained to this small market, as the company is working in software for architecture, engineering, construction, manufacturing and entertainment industries. oth IGV and QTEC have a portion of their technology-centric portfolios dedicated to Autodesk.
The Bottom Line
These quickly evolving firms have caught the public attention in the last decade with their game-changing ideas. There are a number of 3-D printing companies that have yet to gain recognition from ETFs, but as the technology continues to grow, this is likely to change. Investors looking for future exposure should scope out small cap growth and technology ETFs that are likely to quickly adapt to the growing industry.
Follow me on Twitter @lynpaintzall
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Disclosure: No positions at time of writing.
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