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A New Fintech ETF Is Here

ETF Professor

The fintech space is booming, but to date, just one exchange traded fund has been dedicated to that theme. That changed Monday with the debut of the ARK Fintech Innovation ETF (NYSE:ARKF).

ARKF is the fifth actively managed fund in ARK Investment Management's stable.

What To Know

The newest ETF from New York-based ARK Investment Management has some qualifiers for what is considered a fintech stock.

“A company is deemed to be engaged in the theme of Fintech innovation if (i) it derives a significant portion of its revenue or market value from the theme of Fintech innovation, or (ii) it has stated its primary business to be in products and services focused on the theme of Fintech innovation,” according to ARK.

Translation: ARK defines fintech as the introduction of a new technologically-based product or service that alters the traditional financial services landscape.

Why It's Important

ARKF will compete directly with the Global X FinTech ETF (NASDAQ: FINX). FINX debuted in September 2016 and has $279.48 million in assets under management.

The new ARKF can hold 35 to 55 stocks. Familiar names among the rookie ETF's top 10 holdings include Square Inc. (NYSE: SQ), Amazon.com Inc. (NASDAQ: AMZN), Apple Inc. (NASDAQ: AAPL) and Alibaba Group Holding Ltd. (NYSE: BABA).

“Fintech reimagines the generation, transfer, and storage of value in today's increasingly digital economy, and its impact will extend across every industry,” said ARK CEO and founder Catherine Wood in a statement. “Through facilitating peer-to-peer transfers, gifting, intermediary products, and other non-GDP related economic activity, the companies in ARKF, in our view, will touch more than the $80 trillion in GDP today.”

What's Next

ARKF charges 0.75 percent per year, or $75 on a $10,000 investment. That is slightly higher than the 0.68 percent annual fee on FINX, but the new ARK fund is actively managed while the Global X fund is a passive product.

Data indicate the future is bright for fintech applications, such as mobile payments. As just one example, mobile transaction value was $9.5 trillion in 2016 and could jump to $55 trillion by 2022, according to ARK research.

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