ARK Investment Management has launched its first FinTech-focused exchange-traded fund.
The ARK FinTech Innovation ETF (ARKF) began trading publicly on the New York Stock Exchange Arca on Monday (February 4). It invests in equity securities of companies that ARK believes are shifting financial services and economic transactions to technology infrastructure platforms.
“Powered by innovations within mobile, artificial intelligence, and blockchain technology, companies within FinTech are working to disintermediate or bypass incumbent financial players and challenge traditional institutions by offering new solutions that are better, cheaper, faster, and more novel and secure,” ARK’s founder and chief executive officer, Catherine Wood, said in a press release. “FinTech reimagines the generation, transfer, and storage of value in today’s increasingly digital economy, and its impact will extend across every industry. 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.”
This is ARK’s seventh ETF since launching in 2014.
While the company had been working on ARKF for a few years, its Japanese partner Nikko Asset Management pushed for an earlier launch due to the rapid growth in mobile payments in Asia.
“China is really showing us the way — they didn’t have the older financial infrastructure so they could leapfrog us,” Wood told CNBC. “That business is spreading like wildfire.”
She added that the exchange-traded fund will focus on three areas of technology, including mobile payment companies such as Square, the ETF’s biggest holding, and PayPal. Both of those firms are “nipping at the traditional big bank’s heels,” Wood noted.
And although bitcoin has been on a steady decline, blockchain is another technology on the ETF’s radar. Wood used the example of Square, which allows customers to buy bitcoin through its app, therefore “attracting a new breed of customer.”