Rising From (Credit) Ruins

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(Note: Today’s ETF Talk is the second in our series on funds that are likely to do well when the market begins a “V-shaped” recovery. This week’s fund is in the heart of the tech sector, and specifically the online payment segment of the economy.)

After a calamitous period in which the markets saw the worst slide downward and the greatest destruction of wealth since the Great Recession, investors everywhere are searching for the sectors of the economy that will be the first to rise from the coronavirus-created ruins in the form of a V-shaped rebound.

Due to the need to maintain social distancing to arrest the spread of the epidemic, there has been an increased shift towards online purchasing and the use of credit cards instead of in-person transactions. Thus, it is conceivable that this sector might be one of the quickest to recover once the coronavirus is defeated.

The ETFMG Prime Mobile Payments ETF (NYSEARCA: IPAY) is an exchange-traded fund (ETF) that tracks an index of global equities in credit card firms that provide payment infrastructure, payment processing and payment solutions. While the big credit card names of the past, such as Visa (NYSE:V), MasterCard (NYSE:MA) and American Express (NYSE:AXP), readily come to mind when one thinks of mobile payments, this ETF also includes some less-well-known names, including the latest fintech startups.

The top countries that this ETF is invested in include the United States (76.03%), France (6.24%), the Netherlands (3.87%), Germany (3.14%), Italy (3.09%), Japan (2.76%), Brazil (1.60%), Cyprus (1.53%) and the United Kingdom (0.51%).

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Some of this fund’s top holdings include Fidelity National Information Services, Inc. (NYSE:FIS), PayPal Holdings Inc. (NASDAQ: PYPL), Visa Inc. Class A (NYSE:V), MasterCard Incorporated Class A (NYSE:MA), Fiserv, Inc. (NASDAQ:FISV), Global Payments Inc. (NYSE:GPN), ETFMG Sit Ultra Short ETF (NYSEARCA:VALT) and the American Express Company (NYSE:AXP).

This fund’s performance has been down markedly due to the recent market downslide. As of March 30, 2020, IPAY has dropped 19.87% over the past month and 22.03% for the past three months. It is currently down 22.44% year to date.

Chart courtesy of www.stockcharts.com

The fund has amassed $483 million in assets under management and has an expense ratio of 0.75%, meaning that it is more expensive to hold in comparison to many other exchange-traded funds.

In short, while IPAY does provide an investor with a chance to profit from the world of mobile payments, the sector may not be appropriate for all portfolios. Thus, interested investors always should conduct their due diligence and decide whether the fund is suitable for their investing goals.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Intelligence Report, Successful Investing, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.