PureFunds has seen immense success with its phenomenal ETF ISE Cyber Security ETF (HACK) which has garnered over $1.40 billion in assets within just eight months of launch. The rising potential of the cyber security companies thanks to ever-increasing cyber crime has made this fund a huge hit within such a short span.
HACK’s success boosted PureFunds to issue more compelling tech ETFs. As a result, PureFunds launched two ETFs, one on Mobile Payments and the other on Big Data, recently. Let’s take a peek into the ETFs and analyze their prospects:
PureFunds ISE Mobile Payments ETF (IPAY)
This newly launched ETF tracks the ISE Mobile Payments Index to provide exposure to the performance of companies engaged in the mobile/electronic payments business. Companies offering payment solutions including smartcards, prepaid cards and virtual wallets get entry into the index. This approach results in the fund holding a small basket of 31 stocks.
Visa Inc. Ltd takes the top spot with 6.35% exposure, followed by Mastercard Inc. and American Express Co. each with less than 6% exposure. Infrastructure and Software dominates the fund with a little less than 32% exposure, followed by Processors and Cable Networks, each with double-digit allocation of about 26.4% and 23.6% respectively.
As far as geographical concentration is concerned, the fund is heavy on the U.S. with about 85% focus followed by France (4.32%) and Germany (3.83%). The fund charges 75 bps in fees and has amassed about $2.5 million in assets, having debuted in mid July.
Per the issuer, the recent surge in digitalization in payment activities prompted it to shoot this fund. The Electronic Transaction Association (ETA) calculated that around 70% of $11.5 trillion worth U.S. consumer spending are performed electronically. This huge market definitely calls for the need to have a mobile payment ETF.
Competition: Thought the fund should not face any direct competition as IPAY is supposed to be ‘the world's first Mobile/Electronic Payments ETF’, its holdings have presence in other ETFs. From that point of view, financial ETF iShares U.S. Financial Services ETF (IYG - Free Report) could be a threat as the fund has a pretty decent exposure in IPAY’s top three holdings.
PureFunds ISE Big Data ETF (BDAT)
The ETF looks to track the ISE Big Data Index. This benchmark intends to reflect the performance of companies engaged in the big data and analytics industry, including those that offer big data origination, aggregation, applications and solutions.
The fund invests about 20% of its basket in its top three holdings, Google (7.39%), Facebook (6.74%) and Oracle (5.28%). Its 32-holdings portfolio is heavy on Applications/Solutions companies with about 63.2% exposure while the Data origination sector has over 36% weight.
The U.S. is the top country in the fund with about 86.6% of the portfolio followed by Germany (5.4%) and China (4.6%). The fund charges 75 bps in fees for this concentrated exposure.
Big Data was one of the major catchphrases in the technology sector and one of its most promising areas. As per IDC, the Big Data technology and services market will expand at a CAGR of 26.24% till 2018 end. So, this enormous market opportunity will surely entice investors to play the field in the basket form. This fund has also accumulated about $2.5 million in assets, having debuted in mid July.
Competition: The fund is unique concept wise but not holdings wise. Most of its top 10 holdings are highly exploited by several tech funds. Among these, First Trust Dow Jones Internet Index Fund (FDN), iShares US Technology ETF (IYW), Global X Social Media Index ETF (SOCL - Free Report) , SPDR Technology Select Sector Fund (XLK - Free Report) and NASDAQ Technology Dividend Index Fund (TDIV) are threats to the newly launched BDAT (read: ETFs in Spotlight after Apple and Microsoft Earnings).
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