Defining the future of finance, how this megatrend can be captured within listed securities and headwinds for the industry were the topics covered in ETF Stream’s recent webinar in partnership with Grayscale and HANetf.
The discussion, titled A turning point for the future of finance, started by looking at the post-Global Financial Crisis fintech boom and the size of opportunity this represents for investors.
Taking a broad look at the field, David LaValle, global head of ETFs at Grayscale, said: “At the highest level, it is the cross-section of finance and technology and the disruptors that are going to disrupt the world of finance.”
Naturally, this involves not just looking at digital payments, digital assets or commission-free trading platforms in isolation but bringing several early-day themes together to build a future of finance cohort at the “bleeding edge”, LaValle said.
From an investment perspective, LaValle’s firm launched the Grayscale Future of Finance UCITS ETF (GFOF) in May, capturing what he described as financial foundations, tech solutions and digital asset infrastructure.
GFOF looks beyond just blockchain companies but excludes candidates that are not pure play in a future of finance subtheme. LaValle noted constituent industries are subject to change as fintech and digital assets continue to evolve.
“The basket will grow simply as a result of more companies focusing more attention and resources on capturing a segment of the digital economy,” he added. “It is an emerging economy and these take time to mature.”
Andre Voinea, head of German-speaking regions at HANetf, which partnered with Grayscale to launch GFOF, continued: “First generation future finance products were just simpler as there was not the depth of companies available to build a diverse index.”
Voinea said while crypto remains an unregulated asset class, GFOF is adjacent and captures regulated, listed companies selected by index provider Bloomberg and Grayscale, which is the world’s largest asset manager focused on digital assets.
Looking at the current state of the market for future of finance segments, he noted the first half of the year was challenging for disruptive companies which soared during the COVID-19 period of heightened tech reliance.
“Do not get discouraged,” Voinea said. “Cycles come and go in crypto and the general economy. My feeling is most keep their cool. If you believe in the future of digital assets, now is not such an inopportune time to look at the theme.”
LaValle agreed and argued the future of finance industry is currently in a similar position to the internet revolution two decades ago.
“Imagine being able to invest in the internet infrastructure ETF in 1998. That is the analogy I would use for our ETF and the digital economy,” he added.
Looking ahead, LaValle suggested while Europe may not have been as receptive to thematic products a decade ago, he believes the continent is “a lot more flat” versus the US today.
Grayscale will continue to launch thematic equity products “in the US and beyond” irrespective of the Securities and Exchange Commission’s treatment of the firm’s applications for a spot bitcoin ETF.
To watch the full webinar, click here