Horizons ETFs has launched a multi-thematic equity ETF in Canada providing exposure to several innovative technology industries, namely: batteries, biotechnology, internet, and gaming – referred to collectively by the initialism ‘BBIG’.
Steve Hawkins, President and CEO of Horizons ETFs.
The Horizons Global BBIG Technology ETF has listed on Toronto Stock Exchange with Canadian dollar (Ticker: BBIG CN) and US dollar (BBIG.U CN) share classes.
It comes with a management fee of 0.45%.
Steve Hawkins, President and CEO of Horizons ETFs, said: “Over the last year, we have seen the pace of global technological disruption and proliferation accelerate, particularly in several key industries including those that BBIG offers exposure to.
“While these investment themes are in focus now, the continued growth of the BBIG industries will be catalysts for the advancement of other technology-reliant industries such as the electric vehicle industry, underscoring their future growth potential.”
Investment case
According to business consulting firm Grandview Research, the battery industry is expected to triple its global revenue to $300 billion by 2027, driven by increased demand for sustainable energy sources as the world shifts away from fossil fuels.
Grandview Research also predicts that the biotechnology industry’s market size will exceed $2.4 trillion by 2028, up from its current valuation of $760bn. The factors driving this growth include favourable government policies, the launch of new and advanced products, robust investment, and rising demand for synthetic biology.
The ETF’s internet category covers companies leading the development of several internet-based technologies including cybersecurity, e-commerce, and the cloud. All of these segments have received a boost during the Covid-19 environment as businesses and consumers moved their activities online.
Finally, the fund’s gaming category includes video game publishers, gaming hardware producers, e-Sports league operators, and developers of augmented and virtual reality technology. Grandview Research expects global revenue linked to these segments to more than double over the next few years, scaling up from $138bn to reach $291bn by 2027. The combination of increasing internet penetration globally and growing access to games on the internet is expected to keep prospects upbeat over the coming years.
Methodology
The fund is linked to the Solactive Global BBIG Index which selects its constituents from a global universe of stocks with market capitalizations greater than $10bn and average daily trading volumes above $10 million. Eligible companies can be headquartered anywhere worldwide but must be listed on a developed market exchange.
Security selection is driven by ARTIS, index provider Solactive’s proprietary natural language processing algorithm. ARTIS identifies firms linked to a specific theme by screening for related keywords in a company’s publicly available documents.
The index selects 10 stocks from each of the four BBIG industry categories, choosing those that ARTIS has identified as having the greatest relevance to that theme. Constituents are equally weighted, and the index is reviewed on a quarterly basis.
“The index’s focus on the top ten ranked names, according to the ARTIS score in each category, helps ensure a portfolio that is focused on the most promising drivers of innovation,” says Hawkins. “At the same time, the index’s global mandate ensures that the exposure is not limited by home bias and reflects the cutting-edge technologies that are being discovered and produced around the world.”