- ARK Investments Management has launched its first ETF focused solely on the Fintech
- One of the main reasons for its launch is the popularity of mobile payments in Asia
- The companies in Ethe TF include Amazon, Square, and Paypal
ARK Investment Management (not to be confused with ARK blockchain solutions) has launched its first exchange-traded fund focused solely on the Fintech sector on February 4, 2019. It was launched the same day on NY Stock Exchange The ETF, which is the seventh in the company’s portfolio, invests heavily in companies that have the potential to disrupt traditional financial sector, shifting services and transactions to technology infrastructure platforms.
The Paradigm Shift
According to ARK’s founder and CEO Catherine Wood, the companies within Fintech sector are able to offer “cheaper, faster, and more novel and secure” solutions thanks to the advancements in mobile, AI and blockchain technology and are reimagining the generation, transfer, and storage of value. She said:
“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.”
Asian Countries Leading the Way
One of the main reasons why ARK Investments launches its ARK FinTech Innovation ETF (ARKF) now and not later is the rapid growth of mobile payment solutions’ popularity in Asia. Due to this fact the Japanese partner of the company, Nikko Asset Management, insisted on earlier launch.
Wood believes that this business “is spreading like wildfire”. She commented:
“China is really showing us the way — they didn’t have the older financial infrastructure so they could leapfrog us.”
Focusing on the Biggest Fintech Players
According to Wood, the ETF will focus on three key technological areas: mobile payments, Bitcoin and companies like Amazon. The major companies in the first area that ARK Investments is interested in include credit card processing provider Square, which currently is its biggest holding, as well as industry giant PayPal. Catherine Wood believes that both of these companies are posing a major threat to traditional banks.
The second area of the company’s interests is Bitcoin and blockchain. Despite the nose-dive in former’s price, the latter technology has many practical uses and therefore has a great potential. It also can help attract new clients: for example, Square does it by allowing its users to buy Bitcoin through the application.
ARK FinTech ETF also includes Amazon and Apple; the latter brand seems interesting to the company despite the recent slump in its shares’ price because of the Apple Pay mobile payment solution.