- >>> How To Cash In On Money's Coming Makeover
Investors Business Daily
Money is about to get a face-lift. And investors are looking to which fintech stocks will cash in.
Everything about money — from the way it's spent, stored and invested — is up for new forms of digitization
. Investors see a massive opportunity.
Nearly $25 billion in venture capital funding poured into financial technology firms this year through the third quarter
, says industry tracker CBInsights. The latest deluge of funding comes just one year following a record-breaking $40.6 billion put into the industry in 2018
. And this year's haul is more than the $18.8 billion invested in all of 2017.
These are private companies. But leading public fintech stocks are up big too this year. Which fintech stocks let investors play the future of money now?
There are three primary ETFs to help you buy into the public companies leading the fintech charge - ETFMG Prime Mobile Payments ETF
(IPAY) is the largest with assets of $782.8 million.
The ETF owns 40 publicly traded companies at the epicenter of payment services and processing
. The ETF's largest holding, at 7.5%, is Global Payments
(GPN). The company processes digital, credit card and check payments
. It operates not only in North America, but also Europe and Asia.
Shares of Global Payments are up 75% this year as investors applaud its robust growth. The company's revenue jumped more than 29% in the third quarter
to $1.1 billion. Analysts are looking for the company's revenue to grow 62% in 2020 and earnings per share to rise 22% to $7.55.
Such strong fundamentals and chart action explain why Global Payments carries a sky-high 97 IBD Composite Rating.
What makes ETFMG Prime Mobile somewhat unique is its large stakes in credit card processors
, says Todd Rosenbluth, director of ETF and mutual fund research at CFRA. The ETF, for instance, puts a more than 18% combined weighting in Visa (V), Mastercard (MA) and American Express (AXP).
The credit card companies have performed strongly this year and are turning into important plays to get into fintech stocks. Visa, the largest company of the three, has seen shares jump 41% this year. The credit card stocks are among the top performers in the S&P 500 this year.
ETFMG Prime Mobile Payments charges 0.75% annually. It's up 41.6% this year through Dec. 17, 2019.
A Narrower Fintech Stock ETF
Another major player in the fintech ETF space is - Global X FinTech ETF
(FINX). The ETF, with assets of $414 million, owns 34 stocks.
The Global X FinTech ETF's largest holding, at 14%, is Fiserv
(FISV). Shares of the payment processing
provider are up nearly 60% this year.
There are strong fundamentals to back up Fiserv's stock price gains, too. The company's profit this year is on track to rise nearly 30%
to $4.02 a share. And in 2020? Analysts are calling for an annual profit of $4.91 a share, up 22%
The Global X FinTech ETF charges 0.68% annually. And it's up 35.8% this year through Dec. 17.
Another Approach ARK Fintech Innovation ETF
(ARKF) is a new entrant in the industry. It traces its inception to Feb. 4, 2019. It brings an active selection process
to find ways to buy into new products or services "that potentially (change) the way the financial sector works."
The fund is still small, with assets of roughly $82 million. But it's looking to differentiate itself from the larger options. The ETF's top holding is payment services provider Square
(SQ) at 9.5% of the portfolio. But the ETF adds shares of companies working different angles than other fintech stocks.
For instance, the ETF's second-largest holding after Square is Apple
(AAPL) at 6.1%, followed by China's Tencent
And that's why Rosenbluth, when looking at the fintech ETFs, warns: "Despite similar sounding names what's inside these thematic funds and their performance records in 2019 are quite different."
Dave Nadig, managing director of ETF.com, has a larger warning. He points out these ETFs are limited to publicly traded firms. That's a big drawback in fintech, he says. "The vast majority of interesting fintech companies are still private
, so this is probably money chasing already richly valued, public companies," he said.
Three Ways To Play Fintech Stocks
ETF Symbol YTD % Ch. Assets ($ millions) Expense Ratio ETFMG Prime Mobile Payments ETF
IPAY 41.6% 782.8 0.75% Global X FinTech ETF
FINX 35.8% 414.4 0.68% ARK Fintech Innovation ETF
ARKF 18.4% 81.7 0.75%