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Machine Intelligence Drives 3 New SPDR Economy ETFs

This article was originally published on ETFTrends.com.

Disruptive innovation continues to make its way into the forefront on the next wave of technological advances that are ready to conquer the financial industry.

State Street Global Advisors, the asset management business of State Street Corporation, announced the expansion of its New Economy sector ETF lineup Tuesday with the launch of the SPDR Kensho New Economies Composite ETF (NYSEArca: KOMP) , SPDR Kensho Clean Power ETF (NYSEArca: XKCP) and SPDR Kensho Final Frontiers ETF (NYSEArca: XKFF) .

The new ETFs, which track proprietary index methodologies developed by Kensho Technologies, an award-winning machine intelligence company, are designed to provide investors with cost efficient, diversified access to the potential growth of innovative companies widely considered to be driving the Fourth Industrial Revolution and ushering in the new economy.

According to a report by multinational professional services firm Ernst & Young, robotics process automation in finance "radically improves cost efficiency under growing pressure on costs, it "helps to remain in control in the constantly changing environment," and "allows to focus skilled resources on driving value creation for the business." As such, the financial industry must prepare for these forthcoming adoptions and that's exactly what these three new ETFs are ready to capitalize on.

"We wanted to continue to provide exposures to clients to be able to build portfolios for an emerging economy," Matthew Bartolini, Head of SPDR Americas Research, told ETF Trends. "So something that is capturing the breathtaking pace of innovation where you're having disruption in many industries from technologies like artificial intelligence, robotics and exponentially faster processing power."

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KOMP seeks to track an index that combines sixteen qualifying New Economy industries, ranging from 3D printing to genetic engineering, to provide investors access to a comprehensive and diversified set of companies propelling the new economy.

XKFF seeks to provide exposure to the commercialization of space and deep sea travel and exploration while XKCP seeks to provide exposure to the clean power industry both in terms of generation and the underlying technology driving it.

"With the result of these innovations, new industries are being created and old ones are being disrupted," said Bartolini. "And we didn't really want to just provide exposure to the innovation like robotics or AI, but the results of the innovation in the ensuing formation of new segments of the economy."

Bartolini cited various areas of focus within this new economy, such as intelligent infrastructure, smart transportation, clean energy, space exploration, and deep sea exploration.

"There are new industries that are being created and we want to be able to provide exposure to map to those (industries)," said Bartolini.

Kensho Technologies leverages alternative data and artificial intelligence to identify and analyze large amounts of data, from companies that are developing the products and services driving the new economy, including those in the entire ecosystem, such as suppliers and service providers, in addition to the pure play companies. State Street Global Advisors first worked with Kensho Technologies in December 2017, when it launched three ETFs tracking indices developed by the firm so the choice to utilize their services once again was a no-brainer.

"Kensho is a leading fintech firm--ranked number one by Forbes," said Bartolini. "They were involved in the largest fintech deal ever (when) S&P purchased them earlier this year and we are leveraging their capabilities from a data science, artificial intelligence, machine learning perspective."

State Street Global Advisors has a long heritage of sector and industry investing and is the longest tenured manager of sector ETFs with the largest and most liquid suite of Sector and Industry ETFs in the world. The firm’s suite of sector and industry ETFs now includes 40 funds with more than $175 billion in assets.

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