The Best Fintech ETF to Invest $500 In Right Now

Investing according to significant market trends can be an intelligent way to allocate your money.

Look around and you'll notice how technology is changing our economy and altering consumer habits. A clear example of this transformation is the fintech industry.

For investors seeking to tap into this evolving sector, finding individual stocks can be overwhelming. This is where exchange-traded funds (ETFs) come into play, allowing for diversified exposure in a single investment.

In this context, the Ark Fintech Innovation ETF (ARKF 0.39%) stands out as a strong choice for anyone looking to invest $500 in fintech.

The Blend of Finance and Technology

The term fintech refers to the merging of financial services with technology. This includes businesses that use digital solutions and innovative tech to improve how they offer financial services to users.

The Ark Fintech Innovation ETF typically holds a range of 35 to 55 different fintech stocks. Notably, the top 10 holdings account for over 50% of the ETF's total assets, suggesting a concentrated approach at the top with smaller holdings supporting it.

It's beneficial for potential investors to understand the main stocks within this ETF. The leading three stocks by their weight are Shopify, Coinbase, and Block. Other significant mentions in the top 10 include SoFi Technologies, Toast, and Robinhood Markets.

These six companies provide a comprehensive view of the fintech landscape. For instance, Shopify offers technology solutions for online merchants, while Toast focuses on the specialized needs of restaurants. Coinbase, Block, SoFi, and Robinhood provide mobile apps that manage various financial tasks, including cryptocurrency trading, peer-to-peer payments, savings accounts, and stock investments.

Additionally, the Ark Fintech Innovation ETF has a notable investment in the Ark 21Shares Bitcoin ETF, making it the fourth-largest holding at a 5% weight. This relationship might appeal or deter investors based on their views towards Bitcoin.

Importance of Patience

Since its launch in February 2019, the Ark Fintech Innovation ETF has grown by 52%. In contrast, the S&P 500 index has returned a total of 132% during the same timeframe, making it a less successful option for investors. Moreover, its performance has been quite volatile.

This is why patience is essential for those considering an investment, as recent trends suggest that things are improving. Over the last year, this ETF has surged by 71%, nearly twice the returns of the broader market. This recent performance adds value to its 0.75% expense ratio.

However, some investors may hesitate to invest after such a strong rally. Nevertheless, there remains significant potential for growth as the ETF currently trades 51% below its peak recorded in February 2021.

Incorporating the Ark Fintech Innovation ETF into a portfolio is a sensible move for those looking to gain exposure to the fintech sector. This strategy requires less time, effort, and expertise than hand-picking individual stocks. Thus, investing $500 into this ETF now could be a wise decision for newcomers or seasoned investors alike.

No positions in any mentioned stocks.

investing, fintech, ETF