Many financial companies are slow-growing and balance sheet intensive, making them more common in value funds and usually less appealing to growth strategies. However, there are asset-light firms that have competitive advantages and that are benefiting from secular trends.
For investors seeking low-cost exposure and passive income, exchange-traded funds (ETFs) offer an excellent way to get started.
ARK Fintech Innovation ETF has surged 51% since April, but I am downgrading to hold due to high valuation and looming seasonal headwinds. The ETF's concentrated, high-beta fintech portfolio is risky with a lofty PEG ratio and significant exposure to SMID caps. Technical indicators show ARKF is overextended, trading nearly 50% above its 200-day moving average and facing key resistance.
| BATS Exchange | US Country |
The fund is a specialized exchange-traded fund (ETF) focused on financial technology (Fintech) innovation. It operates with an active management approach, dedicating at least 80% of its assets to equity securities of companies involved in the expansive sector of Fintech across both domestic and international markets. The investment strategy targets entities that significantly contribute to or benefit from advancements in financial technologies, covering a broad spectrum of businesses, from startups disrupting traditional financial systems to established companies integrating innovative financial solutions. The fund's non-diversified status allows it to concentrate investments in this dynamic and evolving industry, aiming to capture growth from the Fintech revolution.
The fund's primary investment focus is on equity securities of companies engaged in financial technology innovation. These investments are categorized based on the involvement of companies in the Fintech industry:
These equities are chosen on the basis of their direct contribution to the Fintech realm, either through significant revenue generation from Fintech products and services or by defining their main business focus around Fintech innovations. This broad investment mandate enables the fund to participate in various aspects of financial technology, including mobile banking, online payment processing, peer-to-peer lending, and blockchain technologies, among others.