On Monday, ARK Investment Management launched its first fintech-focused exchange traded fund, offering investors the opportunity to gain exposure to financial technology investments. Trading under the ticker “ARKF” on the New York Stock Exchange Arca, the actively-managed ARK Fintech Innovation ETF emphasizes public companies that utilize technology to overtake traditional financial firms. This latest offering marks ARK’s seventh ETF since the firm’s launch in 2014.
The ETF will cover three technological areas: “mobile value transfer devices,” blockchain and artificial intelligence.
“Mobile value transfer devices” includes any service that allow users to pay or send money using their phone. As ARK’s CEO Catherine Wood noted in an interview with CNBC, Square—the ETF’s biggest holding—and PayPal’s focus on peer-to-peer online payments position them to “nip at the traditional big bank’s heels.”
Another major focus of ARK’s ETF is blockchain. Despite the recent fall in the price of bitcoin, Wood remains bullish on the future of cryptocurrencies due to the increase in trading volume and the growth in the number of people utilizing bitcoin. She also noted that fintech leaders such as Square’s CEO Jack Dorsey have been touting the potential of bitcoin, and that by allowing customers to use bitcoin through their services, “they are attracting a new breed of customer.”
The fund’s third major focus is artificial intelligence, particularly as it is being used by start-ups to determine creditworthiness. Wood stated that companies that use artificial intelligence in lending are posed for advancement in the modern economy. Zillow, LendingTree and Baidu are all included in the ETF.
Other major companies included in the ETF include Amazon—who Wood calls the “original fintech player”—and Apple based on the strength of Apple Pay’s growth.
Wood said that the firm had been exploring the idea of a fintech ETF for a few years. The decision to launch the fund now was spurred by Nikko Asset Management, ARK Investment’s Japanese partner. Nikko requested an earlier-than-planned launch after observing the growth of mobile payment services in Asia.
Wood noted that Asia is setting the pace for the growth in fintech: “China is really showing us the way—they didn’t have the older financial infrastructure so they could leapfrog us.” Several major Asian fintech giants such as Alibaba and Tencent are in ARK’s ETF.