Thematic investing is much in practice in the ETF world. It is one of the solid trends which is here to stay. One such emerging trend is gig economy. Shifting demographics and digitalization have probably been rewriting the global employment structure. On this note, SoFi recently launched an ETF called SoFi Gig Economy ETF (GIGE - Free Report) .
What is a Gig Economy?
Per Investopedia, “In a gig economy, temporary, flexible jobs are commonplace and companies tend toward hiring independent contractors and freelancers instead of full-time employees.”Sofi defines it as a free-market system comprising freelancers and shared resources, such as transport and real estate.
The SoFi Gig Economy ETF seeks long-term capital appreciation by offering exposure to companies involved in the tectonic shift toward a “gig” economy. It is an actively-managed ETF which does not track a benchmark. Per the issuer’s factsheet, the gig Economy is global, which is why around 40-50% of GIGE’s holdings consist of companies outside the United States. As of May 17, 2019, the fund holds more than 1100 stocks. The fund charges 59 bps in fees.
How Does It Fit in a Portfolio?
The fund looks quite active in nature asGIGE “is structured so that most companies that IPO can be included in the portfolio within 31 days of their IPO, as opposed to traditional passive funds that must likely wait 60 to 90 days to include a new IPO,” according to SoFi.
Per Investopedia, America is on track to establish itself as a gig economy, and estimates show as much as a third of the working population is already a part of this economy. By 2027, freelance workers may represent more than 50% of the U.S. working population, per a Morgan Stanley report issued in June 2018 (read: Solid US Labor Market Puts Focus on 3 Sector ETFs & Stocks).
On the global backdrop, freelance growth has surpassed overall employment growth in the United Kingdom, France and the Netherlands. The number of freelancers in the European Union doubled between 2000 and 2014, if we go by the Morgan Stanley report.
Due to some project-specific work, companies sometimes hire on a temporary basis. In an economic slowdown as well, recruiters tend to use gig workers to lower costs and meet project needs. Cloud computing, advanced networks, and other technologies are making it easy to work remotely (read: 5 Tech ETFs Up About 20% This Year, Still Have Room to Run).
A report by Staffing Industry Analysts shows that companies' association with Freelance Management System (FMS) grew to 72% in 2016, up from 60% in 2015, and the percentage of companies deploying, or considering deployment of an FMS is 36%, up from 18% in 2015, as quoted on the Morgan Stanley report.
Will It Amass Enough Assets?
There is less competition for the fund as there is no pureplay fund with a similar concept. GIGE could however face competition from Renaissance IPO ETF (IPO - Free Report) as both might have the same stocks in their baskets given their shared focus on tapping the IPO market (read: Blockbuster Beyond Meat IPO Puts These ETFs in Focus).
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