We all know the interest in digital payments continues to grow. More than four in five Americans used some form of digital payment in 2021, continuing a long-standing trend according to McKinsey & Company.
As per the FinTech Magazine the overall use of digital payments in Europe is forecast to grow by 70 percent between 2020 and 2025. 60 percent of consumers in the APAC region conduct payments with digital wallets. 72 percent of payment transactions in China are done with wallets like Alipay and WeChat Pay.
Having taken into account the digital payments global development trends, the RIZEetf launched on November 5th, 2021 the Rize Digital Payments Economy UCITS ETF (Ticker: PMNT) to offer investors a well diversified exposure to the digital payments theme. The ETF seeks to invest in companies that potentially stand to benefit from the structural transition away from traditional cash payments to the speed and convenience of:
- digital wallets,
- digital payments,
- and digital currencies.
The ETF seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Foxberry Digital Payments Economy Index.
The index follows the companies that:
include card payment networks, payment processors, payment infrastructure providers, payment services and solutions providers and digital/crypto currency pioneers that are accelerating the structural transition from traditional cash payments to the speed and convenience of digital wallets, digital payments and digital currencies.the index provider, Foxberry reports.
The RIZEetf as a company do not believe that cash will completely go away, but they do recognise that a new, powerful economy for digital payments is being born and it will grow very fast. At the same time they provide the investors with the following five major reasons to buy the PMNT.
- Favourable Growth Prospects
PMNT is Europe’s new digital payments economy ETF, and provides investors with exposure to companies that are leading the structural transition toward online and digital payments, digital wallets and digital currencies.
- Unconstrained Approach
PMNT’s composition transcends classic sector, size and geographic classifications by tracking an emerging theme.
- SFDR Classification
PMNT is classified as Article 8.
- Powered by Euromonitor®
PMNT is purpose-built in collaboration with Euromonitor, a strategy research firm based in London, United Kingdom, and leverages their unique insights and proprietary classification system of companies that are leaders and innovators in the digital payments economy.
- ETF Efficiency
In a single trade, PMNT delivers access to dozens of companies that are favourably positioned to ride the tailwinds of the digital payments economy theme.
The digitisation of societies across the globe is driving unprecedented growth in the usage of digital payments, digital currencies, and digital wallets. The theme provides exposure not only to existing players capitalising on this growth but also pioneering firms offering innovative solutions to the digital payment economy of tomorrow.
The digital payments transition is a broad, long-term trend that truly embraces globalisation. It is happening at frenetic pace and unlike many of the secular trends of the past, it is in fact emerging market economies rather than developed markets in the West that are driving innovation and growth across many of our digital payments sub-sectors.
The new payments economy theme has defensive characteristics. In any state of the world or in any phase of the economic cycle, digital transactions are set to continue at the expense of cash and traditional payments methods. Many of the forces driving this transition, from the rapid adoption of digital wallets to the rise in e-commerce, will continue regardless of the status of lockdowns.Raful Bhushan, Co-Founder at RIZEetf says.
The PMNT is very well diversified with 61 underlying companies. The top allocation into the GreenSky is less than 4 percent weighting of the ETF, hence there is no big single stock risk. The top 10 holdings constitute 30 percent of the total portfolio.
According to the November 2021 factsheet the ETF is dominated by the U.S. companies that constitute approx. 55.5 percent of the the portfolio. The second largest geographic allocation is Japan with 11.1 percent and the third is Australia with 4.4 percent.
As of December 2nd the ETF’s AUM was approx. USD 0.9M. The fund is UCITS compliant, domiciled in Ireland and its total expense ratio is 0.45 percent.
The PMNT is listed for trading on the following stock exchanges in Europe:
Having said above, now wealth managers have a great opportunity to gain exposure to the digital payments theme via the PMNT ETF as a satellite position to their portfolios. It is a good complementary allocation to the wider digital assets investment theme which should be treated as a sub-category of the much broader financials and IT sectors.
It is of the paramount importance to conduct a proper due diligence process. Make sure to understand in details the risks associated with the investment theme as well as the underlying instrument you plan to purchase to gain exposure to.