ETF Watch: PureFunds Launches 2 ‘Tech’ Funds

August 31, 2016

PureFunds, the firm that launched the first cybersecurity ETF, is launching two ETFs that invest in the “tech” associated with the financial and health care sectors. The PureFunds Solactive FinTech ETF (FINQ) and the PureFunds ETFx HealthTech ETF (IMED) are the first funds to cover the fintech and healthtech spaces.

The ETFs are listed on the Nasdaq and come with expense ratios of 0.68% and 0.75%, respectively.

FINQ’s index takes a global perspective, covering technology services companies that deal in information and software related to the financial industry and online financial services or, as the prospectus puts it, are at “the intersection of finance and technology.”

“These are really companies that utilize transformational and innovative software solutions in the financial services industry, and the solutions focus on one or more of the following three areas: the automation of processes, enhanced distribution of products and services, and the creation of new products and services that did not previously exist,” said Andrew Chanin, CEO of PureFunds.

He noted that 10 or 20 years ago, electronic exchanges like Nasdaq would have been included, but today electronic trading is the norm. Now, Chanin says, firms that offer things like automated advisory services, peer-to-peer lending, payments and transactions, alt currencies and blockchain technology are eligible for inclusion.

Companies included in the index must meet liquidity and investability minimums and have a market capitalization of at least $200 million. As of mid-August, the index covered 33 companies, including 10 non-U.S. firms.

IMED similarly tracks companies that combine technology with the delivery and provision of health care services and products. It excludes pharmaceutical companies but targets the health care informatics, medical instruments and medical appliances spaces.

“This is one of the first funds to have a focus on health care informatics, which is a huge area right now that is not getting coverage in health care ETFs,” Chanin said, pointing out that his firm opted to use the World Health Organization’s definition of healthtech.

He added that he believes the fund has less than 40% overlap with any other health care ETF currently available.

As with FINQ’s index, IMED’s benchmark requires that components meet requirements for liquidity and investability. Companies must have a market capitalization of at least $500 million to be included in the index, which covered 60 names as of the end of June, including 22 non-U.S. companies.

Contact Heather Bell at [email protected].

 

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