Chanin says other IT ETFs are broad-based, versus FINQ’s narrower fintech focus. He adds that while the bulk of FINQ’s classification currently falls under IT, classifications change over time and that could happen with fintech.
“Just because we see X percent focus on IT doesn’t mean it [the fund] is locked in time either,” he says. “As this industry transforms and looks different down the road, the index has the ability to reflect that.”
Chanin sees FINQ fitting in an investor’s portfolios several ways. It may complement portfolios that already have broader financial exposure or for those who want to bet on growth in the financial industry. He adds it also may attract people interested in the financial-service industry but wary of traditional banks, which may still contain trouble assets like underwater mortgages or other fallout from the 2008 financial crisis.
Given the fund’s narrow focus, this fund is a satellite-type holding. Morningstar puts FINQ in small-cap style box in the high-growth category. When asked about how to define the fund, Chanin says, “I personally don’t think [investors] are as concerned about the market cap as they are exposure to as many different companies in that industry,” he says.
PureFunds is marketing this fund to financial advisors, hedge funds and pension plans, with education about the industry being a big part of the outreach. And they are planning on advertising campaigns and a big social-media push.
“We think these [fintech] industries are really interesting ones and there are intriguing reasons to be interested,” Chanin says. “We’re looking at long-term themes that will play out and not [worrying about] the risk of individual names,”