FinTech-Focused Funds and Indexes Dropped More Than 50% in 2022

FinTech-focused funds and indexes reportedly suffered greater losses than financial or tech ones during 2022.

The Wall Street Journal (WSJ) reported Tuesday (Jan. 3) that three FinTech-focused funds and indexes saw drops of greater than 50% during the year, with the Global X Fintech ETF falling 52%, the ARK Fintech Innovation ETF dropping 65% and the F-Prime Fintech Index plummeting 71%.

By comparison, during the same 12-month period, the Financial Select Sector SPDR Fund, which tracks the S&P 500’s financial sector, slipped 12% and the Nasdaq Composite Index dipped 33%, according to the report.

The report attributed FinTech stocks’ woes to the impacts of higher interest rates, the fading away of pandemic-era drivers of growth and the market’s turning against the idea of “growth at all costs.”

In addition to these broad trends that affected all FinTech companies, some firms in the sector were hit by changes that had a notable impact on the specific services they provide, the report said.

For example, lenders were especially hard hit by higher interest rates, eCommerce facilitators were struck by a post-pandemic slowdown in online sales growth and stock trading platforms were impacted by a drop in trading volume, per the report.

PYMNTS’ CE 100 Index — which includes both connected economy and tech stocks — finished the year 35.7% lower than it started it.

All pillars tracked by the CE 100 Index finished in the red for 2022.

As PYMNTS reported Monday (Jan. 2), the pressures that wound up hitting the stocks in the CE 100 Index included the inflation that ran rampant this past year, the rate hikes that pressured businesses and consumers alike, and the Wall Street worries over spending, profits and slowing top-line growth — and how the great reopening might affect it all.

Similarly, the FinTech IPO Index entered the last week of 2022 down 3.7% through the past five sessions and more than 52% lower year to date.

As PYMNTS reported Dec. 22, the specter of continued rate hikes is fueling fears of headwinds for the platforms and the digital-only upstarts that promise to “make over” verticals such as real estate and lending and trade that are rate sensitive.