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First European Fintech UCITS ETF from Source

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Source has launched Europe’s first UCITS ETF focused solely on financial technology (fintech) companies. The company writes that fintech is one of the biggest growth stories of the century so far but, until now, there hasn’t been an easy way to get broad exposure.

The Source KBW NASDAQ Fintech UCITS ETF aims to track the KBW NASDAQ Financial Technology Index, which captures fintech companies publicly listed in the US. The index currently has 50 constituents, from household names such as Paypal and Visa to newer entrants like point-of-sale payment app Square, with market capitalisations ranging from under USD1 billion to over USD150 billion. The 50 companies are weighted equally to ensure performance comes from across the sector and is not dominated by the largest players.
 
Dr Chris Mellor (pictured), Executive Director, Equity Product Management at Source, says: “Fintech companies are reshaping every part of financial services, from consumer finance and payments to insurance and data processing.
 
“The growth of fintech accelerated after the financial crisis, when traditional financial services were under extreme pressure just as consumer behaviour was changing and technologies such as smartphones, cloud computing and big data were taking off.

“Faster, more efficient and more joined-up technology in the financial arena has driven stellar growth for fintech companies and this trend shows no sign of slowing.”

In a recent survey of institutional investors, nearly half (46 per cent) said they anticipate 2017 being a record year for investment in the fintech sector, but the same percentage said a lack of investment vehicles is a hindrance to getting more exposure to it.

The financial services sector identified as being most at risk from fintech disruptors was consumer banking (59 per cent). This was followed by payments (43 per cent), financial advice (30 per cent), foreign exchange (30 per cent), asset management (27 per cent), wealth management (20 per cent) and life insurance (20 per cent).
 

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