Another good example of right place right time ETF issuance is the Franklin Disruptive Commerce ETF (BUYZ) which launched in February, 2020, and has enjoyed returns of 106.40 per cent since then.
The ETF’s manager Matt Moberg (pictured), Senior Portfolio Manager with Franklin Equity Group, explains that for its first 30 days, the launch didn’t seem quite so lucky as the fund had launched straight into the period of extreme volatility experienced in the first quarter of last year. The ETF launched at USD25, went to USD17 and is now over USD50.
“At that time, we did sort of understand that this was one of the great dislocations of my career where fundamentals were accelerating and the stock market was declining,” Moberg says.
He also manages the USD25 billion DynaTech mutual fund and so has a great deal of experience in the space. “We felt that we had an understanding that the market was going the other way from what we expected but we were fully invested so not a lot to do.”
The investment theme behind the DynaTech fund is that we are at the beginning of the fourth investor revolution, a period of massive change and that is permeating throughout all of society.
BUYZ is one of four ETFs that represent the platforms of innovation that Moberg and his team believe will change the way we live. The other two products are the Franklin Genomic Advancements ETF and the Franklin Intelligent Machines ETF.
In e-commerce, Moberg believes that the approach tends to be to the verticals. “Toys, books and travel have all gone online but there are large profit pools which have yet to go online such as autos, real estate and healthcare, in the form of telemedicine, and that is where the opportunities are.”
“We also have an explosion of new business models which had never occurred before with new ways of paying or showing security or making loans,” he says. “Or new ways to do third party fulfilment. The new ecommerce is leading to a tremendous amount of funding new innovations which hits many different industries.”
Moberg finds that disruptive commerce is changing the finance industry, transportation, security and website developments.
“It spreads out into so many industries and we felt that we had a unique view of that aperture through the entire value chain.”
Moberg and his team ask where is the permanent change or semi-permanent change that has occurred, and is not episodic, but where they believe it is permanent. An example of this is grocery shopping. “It’s a hassle to click on your favourite chips, and the 2 per cent milk items are heavy,” he says. “Many people thought: “I would like it to be delivered”, but now the heavy items will be permanently bought online but people still want to go to get their fresh meat and fruits and vegetables.”
Moberg believes another area of growth will be in website development for small to medium sized businesses. “Those size businesses were always intimidated about building a website but the pandemic has forced them to build a website and create something on line as their livelihoods have depended on it. Those same entrepreneurs will never not have an online presence now, which makes us optimistic about the future.”