As is the case with so many industries, the coronavirus pandemic is spurring increased adoption of fintech offerings. And as is the case with the likes of cloud computing, cybersecurity and e-commerce, many of the seismic shifts happening in fintech were well underway before COVID-19 was the dominant issue of the day.
For example, the pandemic is spurring adoption of cashless/contacless payments and creating a window for fintech companies to either take market share from old school banks or fill market voids long ignored by financial services firms.
Led by the likes of Square (NYSE:SQ) and PayPal (NASDAQ:PYPL), fintech ETFs are soaring this year, trouncing rate-sensitive bank ETFs. Here are a few of the top ideas among fintech ETFs to consider now and over the long-term.
ARK Fintech Innovation ETF (ARKF)
ARKF is an actively managed ETF and that's advantageous in this case because the managers aren't constrained by an index, allowing them to establish the largest Square weight among all ETFs. Not only that, but ARKF is chock full of U.S. and international high-fliers that aren't always associated with fintech, such as Apple (NASDAQ:AAPL), Mercadolibre (NASDAQ:MELI) and Sea Ltd.
Another thing: customers love platforms like Square. Traditional banks? Not so much.
“In the US, most customers do not like their banks. In a survey ranking the 100 most popular companies by customer satisfaction, banks took three of the bottom ten places. According to another survey, 71% of Millennials would prefer to visit their dentists than engage with their banks,” writes ARK analyst Max Friedrich.
Benzinga will be holding its annual Benzinga Global Fintech Awards, a day of dealmaking, networking, and recognition in the financial technology space, on Nov. 10, 2020.
Global X Fintech ETF (FINX)
The Global X Fintech ETF (NASDAQ:FINX) is no shrinking violet in the fintech ETF conversation. Home to more than $690.5 million in assets under management, FINX, like ARKF, offers ample international exposure to the tune of almost 42% of the fund's roster.
FINX “seeks to invest in companies on the leading edge of the emerging financial technology sector, which encompasses a range of innovations helping to transform established industries like insurance, investing, fundraising, and third-party lending through unique mobile and digital solutions,” according to Global X.
FINX trades at about seven times sales and 8.38 enterprise value/sales.
Tortoise Digital Payments Infrastructure Fund (TPAY)
The Tortoise Digital Payments Infrastructure Fund (CBOE: TPAY) is one of the hidden gems of the fintech ETF space. The fund tracks the Tortoise Global Digital Payments Infrastructure Index. TPAY features some of the same exposures as its aforementioned rivals, but it takes some of the edge out of fintech volatility by allocating almost 9% of its weight to Mastercard (NYSE:MA) and Visa (NYSE:V).