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FINX: Concentrated Exposure To The High-Growth Potential FinTech Sector

Mar. 02, 2021 11:51 AM ETGlobal X FinTech ETF (FINX)4 Comments


  • FINX looks to track the investment performance of the Indxx Global FinTech Thematic Index (“Underlying Index”).
  • The ETF invests in financial and technology companies looking to transform financial businesses through the use of digital and mobile solutions.
  • The global pandemic has accelerated the adoption of FinTech solutions by reducing the need for human interaction.
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The Global X FinTech Thematic ETF (NASDAQ:FINX) looks to invest in companies with a leading edge in the emerging financial technology sector. This includes companies developing innovative products to transform established industries like insurance, investing, fundraising, and third-party lending through unique mobile and digital solutions.

The ETF offers investors access to high-growth potential companies developing and applying technological innovations to disrupt and improve the delivery of financial services.

Given the rapid advancements in technologies such as blockchain & artificial intelligence, many analysts expect the global FinTech market to become a $400bn+ industry by 2025.

Let’s breakdown FINX’s portfolio to get a better understanding of the type of exposure it has.

Over the last year, FINX has significantly outperformed the broader market, delivering returns of over 56%.

As the pandemic began to gather speed, more people stayed at home and leveraged technology to carry out their financial transactions. Traditional banking institutions which did not develop robust digital and mobile solutions struggled to serve clients during government-imposed lockdowns. In the future, we can expect these institutions to actively seek out FinTech partners to build out their legacy systems, providing further growth impetus for FinTech players.

Constituent Holdings

Over 80% of the fund is invested in Information Technology companies. FINX has 47 holdings, and its Top 10 holdings make up 55.25% of the entire portfolio.

Source: Seeking Alpha

FINX’s most significant exposure is digital payments provider Square (SQ), with an 8.28% allocation. Square has developed various point-of-sale (POS) products that allow customers to pay with credit cards, mobile wallets, and wearables. Furthermore, it has recently broadened its offerings to include a business lending platform, a cash transfer app, customer and inventory management software, and an eCommerce website platform. Its success tells us how critical payments solutions are for small and medium-sized enterprises, which are expected to continue to drive its growth in the future.

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This article was written by

Michael A. Gayed, CFA profile picture
Michael A. Gayed is portfolio manager, and author of five award-winning research papers on market anomalies and investing. He has a BS with a double major in Finance & Management from NYU Stern School of Business, and is a CFA Charterholder. Michael runs the investing group The Lead-Lag Report, focused on helping investors outperform in all market conditions. It offers a tactical, data-driven approach to investing, to achieve long-term success even in the face of uncertainty. With increasing market volatility, it's essential to understand risk-on/risk-off signals, seize high-yield opportunities, and leverage award-winning research to maximize returns. Learn More.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

This writing is for informational purposes only and Lead-Lag Publishing, LLC undertakes no obligation to update this article even if the opinions expressed change. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. It also does not offer to provide advisory or other services in any jurisdiction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Lead-Lag Publishing, LLC expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (4)

This fund has come down quite a bit with the rest of technology. I’ve been waiting for that correction. There may be more to go, maybe significantly so but I opened a position today. I like the international exposure this fund has over the ARKF offering. Will be looking to add more on further weakness.
Good data and COMMENTARY.
dwitzany profile picture
Thanks for the article. It is difficult to get inspired by your endorsement when you don't have a position in this ETF.
Disclosure: I DO have a position, and I like this for many reasons. One reason (@ A-ASTON) is that while I have other ARK funds, I thought it was good to NOT have too many ARK funds, giving me a secondary form of diversification in this highly charged sector.
ARKF outperforms FINX.
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