ALPS Launches Disruptive Technologies ETF

ALPS launched a new fund in late December, focused on providing exposure to the disruptive technology equity space.

ALPS Disruptive Technologies ETF (DTEC) seeks to track the yield and performance, before fees and expenses, of the Indxx Disruptive Technologies Index. The index is designed to provide exposure to global equities that enter the traditional markets with new digital forms of production. The index seeks to maintain an equal weight stance among 100 equities through 10 disruptive themes.

Fund Characteristics

The fund seeks to provide global exposure to equities across 10 disruptive themes. Within a few days of trading, the fund has generated an asset base of $2.6 million. The fund is a moderately expensive bet, as it charges a fee of 50 basis points a year.

It invests across Healthcare Innovation, Internet of Things, Clean Energy and Smart Grid, Cloud Computing, Data and Analytics, FinTech, Robotics & Artificial Intelligence, Cybersecurity, 3D Printing and Mobile Payments. Its top theme allocations are to Cybersecurity, Clean Energy and Smart Grid and Cloud Computing, with 10.5%, 10.1% and 10.1% exposure, respectively (as of Dec 31, 2017).

From an individual holding perspective, Gemalto NV, Xinjiang Goldwind Science Technology Co. Ltd. and Cyberdyne Inc. are the top three allocations of the fund, with 1.5%, 1.2% and 1.2% exposure, respectively (as of Jan 9, 2018).

How Does it Fit in a Portfolio?

This ETF is a unique offering, as it gives investors a broad global exposure to the disruptive tech space, which rallies on innovation. Given the current environment around the tech space, this ETF is poised to offer great returns in the future.

As a result, this ETF is a good way to diversify investors’ portfolio by giving exposure to equities bullish on innovation. Moreover, this ETF also offers some geographical diversification, as it invests around 63% of its assets in U.S. equities and 37% in international equities.

Competition

The fund faces immense competition from other funds focused on providing exposure to the same space. Below we discuss a few ETFs that seek to provide exposure to this corner (see all Technology ETFs here).

ARK Innovation ETF ARKK

This ETF offers exposure to the disruptive tech space and provides exposure to companies growing through innovation.

It has AUM of $431.3 million and charges a fee of 75 basis points a year. From an individual holding perspective, Tesla Inc TSLA, Bitcoin Investment Trust and Stratasys Ltd SSYS are the top three allocations of the fund, with 3.0%, 2.6% and 2.4% exposure, respectively (as of Dec 29, 2017). Its top theme allocations are to Bioinformatics, 3D Printing and Autonomous vehicles, with 9.1%, 8.3% and 7.5% exposure, respectively (as of Sep 30, 2017). The fund has returned 82.0% in a year.

Global X FinTech ETF FINX

This fund offers exposure to the global FinTech space.

It has AUM of $63.1 million and is a relatively expensive bet as it charges a fee of 68 basis points a year. From a geographical perspective, it has high exposure to United States, Germany and Denmark, with 65.5%, 8.6% and 8.3% exposure, respectively (as of Sep 30, 2017). From a sector look, Data Processing & Outsourced Services, Application Software and Internet Software & Services are the top three allocations of the fund, with 48.3%, 30.7% and 7.8% exposure, respectively (as of Sep 30, 2017). From an individual holding perspective, Wirecard AG, Paypal Holdings Inc PYPL and Temenos Group AG-REG are the top three allocations of the fund, with 8.6%, 6.8% and 6.7% exposure, respectively (as of Jan 9, 2018). The fund has returned 53.6% in a year.

Robotics & Artificial Intelligence ETF BOTZ

This fund seeks to invest in companies that have chances of benefitting from increased demand of robotics and AI.

It has AUM of $1.8 billion and charges a fee of 68 basis points a year. The fund is heavily inclined towards Industrial Machinery, Electronic Equipment & Instruments and Electronic Components, with 29.5%, 11.9% and 11.1 % exposure, respectively (as of Sep 30, 2017). The fund’s top three holdings are Nvidia Corp NVDA, Yaskawa Electric Corp and Fanuc Corp with 8.2%, 8.1% and 8.0% allocation, respectively (as of Jan 9, 2018). From a geographical perspective, the fund’s top three allocations are to the Japan, United States and Switzerland, with 45.6%, 26.8% and 8.4% exposure, respectively (as of Sep 30, 2017).  The fund has returned 65.5% in a year.

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