2 Fintech ETFs that look poised for a rebound

Financial technology (fintech) stocks have been among the hottest on Wall Street during the pandemic. To research by SVB Financial Group points out that five of the ten biggest tech launches backed by venture capital on Wall Street in 2021 were fintech names.

The most notable lists from the pandemic era include To assert (NASDAQ:), Coinbase global (NASDAQ:), Marqueta (NASDAQ:), Robinhood Markets (NASDAQ:), Sofi Technologies (NASDAQ:), and Grill (NYSE:)among others.

Meanwhile, global fintech companies raised record funding of $131.5 billion, or approximately 20% of all capital invested in 2021 and recent research suggests the global fintech market could be worth more than $320 billion by 2026. Such growth would imply a compound annual growth rate (CAGR) of well over 23% between 2021 and 2026.

However, following record stock prices, particularly in early 2021, many high-growth fintech companies have come under pressure. Investors have notably become skeptical of high valuations due to the rise and uncertainties about the Federal Reserve’s next move.

Today’s article features two exchange-traded funds (ETFs) that focus on the industry. They might appeal to readers who think fintech stocks could see higher prices in the rest of the year.

1. Global X FinTech ETF

  • Current price: $34.62
  • 52 week range: $30.57 – $53.07
  • Dividend yield: 6.55%
  • Expense ratio: 0.68% per year

Our first fund, the Global X FinTech ETF (NASDAQ:) provides exposure to global fintech companies. They include names in mobile payments, marketplace lending, cryptocurrencies, financial software, crowdfunding, and robo-advisor services. The fund was first launched in September 2016.

FINX, which follows Indxx Global FinTech Thematic Index, currently has 66 stocks. The top ten holdings represent more than half of the net assets of $874.8 million.

The shares of information technology have the highest bracket with 77.7%. Next come financials (14%), industrials (4.7%), communication services (2.5%) and healthcare (1.2%).

Almost 70% of the stocks in the fund’s portfolio are from the United States. This is followed by companies from the Netherlands (6.2%), New Zealand (3.1%), China (3%) and Switzerland (2.7%), among others.

Financial Software Group Intuitive (NASDAQ:) leads the portfolio with an 8.31% share. Payment heavyweight Fiserv (NASDAQ:)mobile payment group based in the Netherlands Adyen (OTC:); payment processor Fidelity National Information Services (NYSE:)and SS&C Technologies Holdings (NASDAQ:)which offer financial software products and services, are among the top stocks on the list.

In 2022, FINX fell 13.9% and hit a 52-week low on January 28. The price/earnings (P/E) and price/book (P/B) ratios stand at 22.73x and 3.28x. Following the recent pullback, many stocks in the fund are trading at lower valuations than in 2021. Prospective investors might consider investing in FINX at current levels.

2. Defiance Digital Revolution ETF

  • Current price: $16.06
  • 52 week range: $12.13 – $24.44
  • Spending rate: 0.65% per year

Our next fund brings us to the emerging market of non-fungible tokens (NFT), which hit Last year. the Defiance Digital Revolution ETF (NYSE:) is considered the first fund to focus on NFTs. It also provides access to blockchain technologies and cryptocurrencies.

NFTZ daily chart

NFTZ, which currently owns 34 companies, tracks the BITA NFT and Blockchain Select Index. It started trading in December 2021 and the net assets stand at $11.4 million. In other words, it is a new and small fund.

In terms of sector exposurecrypto mining (32%), crypto asset management & trading (23%) and NFTs (22%) topped the list as of December 31, 2021.

The top ten companies represent nearly 45% of the fund’s portfolio. Top holdings include Japanese financial services firm SBI Holdings (T:)mining company Iris Energy (NASDAQ:), eBay (NASDAQ:)digital asset exchange Coinbase Global (NASDAQ:) and based in Canada Hut 8 Mining Corp. (NASDAQ:).

The geographical distribution is heavily weighted towards the United States with 60.7%. Next come Canada (24%), Germany (4.9%), Japan (4.8%) and the United Kingdom (3.7%).

So far this year, the fund is down nearly 13.5% and hit a record low of $12.13 on Jan. 24. Interested readers should note that thematic investing can be risky, especially in the short term. Therefore, they may want to do more due diligence on NFTZ before hitting the buy button.

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