FinTech ETFs and Their Underlying Indexes – FINX and FINQ

Innovative technology is rapidly changing the world, reshape a number of industries, finance is one of those and it’s fundamentally affecting other industries. Diving deep into companies that provide technology products and services in Finance arena, and then extract them out to form ETFs has already been done. FINX and FINQ are two of them.

Both FINX and FINXQ came into market quite latterly, one in September 2016, the other August 2016, with AuM of only $3.4s and $1.34 million each.

The Global X FinTech ETF, issued by Global X, FINX, is based upon INDXX Global Fintech Thematic Index, designed to provide exposure to exchange-listed companies involved in mobile payments, peer-to-peer (P2P) and marketplace lending, financial analytics software and alternative currencies.

Along with this FinTech index, the index issuer, Index LLC also launched two other thematic indexes – Internet of Things and Robotics & Artificial Intelligence. The former enlist companies producing wearable technology, home automation, connected automotive technology, sensors, networking infrastructure/software, smart metering, and energy control devices that are connected to the Internet through embedded devices and software, which allows these physical objects to collect, analyze and exchange data. the latter one is designed to provide exposure to exchange-listed companies in developed markets that are involved in the development of robotics and/or artificial intelligence, including companies involved in developing industrial robots and production systems, automated inventory management, unmanned vehicles, voice/image/text recognition, and medical robots or robotic instruments.

FINQ, the PureFunds Solactive FinTech ETF, tracks Solactive FinTech Index, which includes those that principally derive revenue from technology services that facilitate financial activities such as the sale of financial-related information, financial data analysis services, financial services software tools or platforms, or web-based financial services. In order to achieve this mandate, the index relies on a proprietary research process to identify the initial FinTech universe. The index is comprised of a basket of equally weighted common stocks and depositary receipts of domestic and foreign FinTech companies.

Other than these public listed indexes, FactSet has created FactSet Fintech Index for Nikko Assets based on their proprietary Revere Business Industry Classification System(RBICS)16 FinTech relevant sectors – as following – are defined and companies participating in those are screened out to form the index.

Commercial Bank and Credit Union Industry Software; Other Finance Industry Software; Financial Services Industry Consultants;  Investment Management and Brokerage Industry Software; Payment Processing Industry Software; Financial and Compliance ERP Software; Insurance Software; Trading Software; Real Estate Classifieds and Directories Sites; Consumer Financial Data and Information Publishing; Multi-Type Financial Data Content Providers/Sites; Consumer Credit Cards; Electronic Payment Processing Services; Electronic Transaction Processing and Clearinghouse Activities; Point-of-Sale (POS) Terminal Manufacturing; Retail Automation Products.

Let’s take a close look at their performance so far. FINX has been underperforming compared to the market until the very recent month in April 2017.

 

 

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