FactSet launches Global FinTech Index

Jan 16th, 2017 | By | Category: ETF and Index News

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Connecticut-based FactSet has launched the FactSet Global FinTech Index, tracking the performance of globally-listed companies providing disruptive technologies to the financial services space. According to sources at FactSet, the company is in talks with exchange-traded fund issuers wishing to use the index as an underlying reference for future investment products.

FactSet Global FinTech Index

The FactSet Global FinTech Index provides exposure to 88 global FinTech companies with significant exposure to the electronic payment processing (31.6%), credit cards (10.0%), financial & compliance ERP software (6.9%) and point-of-sale terminal manufacturing (6.9%) sub-industries.

Companies selected for inclusion in the index will be engaged in developing and providing financial technologies that facilitate the transition of businesses and consumers to a digital economy. These include those focused on developing data, analytics, software, hardware and consulting services to deliver solutions for payment processing, money transfer, banking and investment.

Eligible companies are drawn from over 30 developed and emerging market exchanges, must have a market capitalization greater than $300m and a 3-month average trading value of at least $1m.

The engine behind the index is the firm’s in-house ‘Revere Business Industry Classification System (RBICS)’, an in-depth taxonomy utilizing both market-defined and bottom-up approaches to classification to deliver the granularity of about 1,400 sector groups.

Jeremy Zhou, Head of indexing at FactSet, commented: “The granularity of the FactSet Revere Business Industry Classification System helps investors to better understand and invest in evolving market areas like FinTech, which spans multiple industries often in niche areas that might be difficult to discover. With RBICS we are able to develop a relevant benchmark by identifying 17 FinTech-targeted industries out of RBICS’ more than 1,400 industry levels.”

Securities are classified to one of the 17 FinTech-related industries as defined by RBICS. As of 16 January 2017, the largest sub-industries in the index are electronic payment processing (31.6%), credit cards (10.0%), financial & compliance ERP software (6.9%) and point-of-sale terminal manufacturing (6.9%).

The index currently has 88 constituents, is equal-weighted and calculated in US dollars. It is rebalanced semi-annually in January and July.

The largest country exposures are to the United States (50.7%), the United Kingdom (6.9%), Japan (6.9%), France (3.5%) and Taiwan (3.5%).

In response to growing demand for exposure to financial technology companies, New York-based ETF provider Global X Funds unveiled the Global X FinTech Thematic ETF (Nasdaq: FINX) in September 2016. The fund tracks the Indxx Global FinTech Thematic Index, providing exposure to 29 global firms with significant business operations in the following FinTech industries: peer-to-peer marketplace lending, mobile payments, crowdfunding, blockchain and alternative currencies, personal finance software, automated wealth management and trading, and enterprise solutions. The ETF has a total expense ratio (TER) of 0.68%.

Quicker to market by just two weeks, PureFunds launched the PureFunds Solactive FinTech ETF (Nasdaq: FINQ) on 31 August 2016. The fund tracks the Solactive FinTech Index, composed of 31 global holdings, and has a TER of 0.68%.

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