ARK Investment Management is launching its first financial technology, or “fintech,” focused exchange traded fund on Monday.
The actively managed “ARK Fintech Innovation ETF” began trading on the New York Stock Exchange Arca under the ticker “ARKF.” It includes public companies that could use technology to bypass incumbent financial players by making things faster and cheaper, the company said. This is the firm’s seventh ETF since launching in 2014.
The idea for a fintech ETF had been on the New York-based firm’s road-map for a few years, CEO Catherine Wood told CNBC. But ARK’s Japanese partner Nikko Asset Management saw the rapid growth in mobile payments in Asia, and asked if they could launch earlier than planned.
“China is really showing us the way — they didn’t have the older financial infrastructure so they could leapfrog us,” said Wood. “That business is spreading like wildfire.”
ARK has $6.5 billion assets under management.
Wood pointed to the ubiquity of giants like Alibaba, parent company of Ant Financial, and Tencent in Asia, which are both in the ETF. Those and other companies in ARKF are looking to upend traditional institutions by offering “better, cheaper, faster, and more novel and secure” services, according to Wood.
The ETF spans across three areas of technology. The first is “mobile value transfer devices,” or anything that lets someone send money or pay through a phone. Square, the ETF’s biggest holding, and PayPal focus on peer-to-peer payments and both leaders in the U.S. online payment realm and are “nipping at the traditional big bank’s heels,” Wood said.
Another key area is blockchain, the technology behind bitcoin. Despite the nosedive in bitcoin prices, Wood is still bullish on the future of it and other cryptocurrencies. She pointed to the jump in volumes, and the amount of people sending and receiving bitcoin, despite falling prices. Square, for example, lets customers buy bitcoin through the Square Cash App, and its CEO Jack Dorsey has touted its potential. By embracing crypto, Wood said “they are attracting a new breed of customer.”
Other names in the ETF include Amazon, the “original fintech player,” according to Wood, and Apple because of growth in Apple Pay.
The fund also focused on artificial intelligence, which is being used by start-ups to assess creditworthiness. Companies that don’t use AI for lending, are positioned to lose out in the modern economy, according to Wood. Baidu, Zillow, and LendingTree are also included in the ETF.