Focus: Thematic Technology ETFs

Robotics, blockchain and cybersecurity are themes capturing investors' attention and ETF providers have responded with specialist offerings

Monika Dutt 19 April, 2018 | 2:47PM

 

 

Monika Dutt: Robotics, blockchain and cybersecurity are themes that capture people’s attention, and a growing number of investors are looking to capitalise on them.

One way that investors can access to technology megatrends is through thematic ETFs. These funds allow investors to place a pure tactical bet on a long-term trend they believe in.

For example, the iShares Robotics and Automation ETF (RBOT) selects companies based on the revenues they derive from robotics and automation. In this portfolio, you’ll find companies like Service Now, a cloud computing firm. You’ll also come across more familiar names such as Apple, Intel and Toshiba.

In an increasingly digital world, one of the biggest threats we face is cybersecurity. To capture this growing industry, the ETF Securities Cyber Security ETF (ISPY) includes companies that specialise in email encryption, data protection and vulnerability scanners.

A new entrant in the market is Europe’s first blockchain ETF offered by First Trust. This fund selects companies that actively develop or use blockchain, so companies like IBM, Barclays and Nasdaq. This fund not a cryptocurrency ETF, as cryptocurrencies like Bitcoin are only one application of blockchain.

These three funds offer narrow exposure and are only suitable as long-term satellite holdings in a well-diversified portfolio.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article
Security NamePriceChange (%)Morningstar
Rating
ETFS ISE Cyber Security GO ETF Acc GBP1,047.74 GBX0.55-
iShares Automation&Robotics ETF USD Acc7.89 USD1.09-
About Author

Monika Dutt  is a Passive Strategies Research Analyst for Morningstar Europe