Nasdaq and Keefe Bruyette & Woods have teamed up to launch a benchmark designed to track the performance of financial technology companies that are publicly traded in the U.S. The most recent addition to the KBW Nasdaq industry-leading family of financial indexes has been introduced under the name KBW Nasdaq Financial Technology Index (ticker: KFTX), according to an official press release.
KFTX provides investors with the most precise representation of fintech sector, depending on KBW’s expertise in financial services and Nasdaq’s long history of creating market-leading indexes.
Since fintech companies are not easily categorized into a single industry group, index eligibility is not limited to securities within a particular industry classification. As such, KFTX includes various entities that leverage technology to deliver financial products and services.
Furthermore, there will be a total return version of the index, KBW Nasdaq Financial Technology Total Return Index (KFTXT), which has been simultaneously launched.
KBW and Nasdaq have collaborated previously to construct indices tracking various financial equity sectors. The family of their indexes are closely watched benchmarks and are widely cited in the media as barometers for the health of the financial sector.
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More specifically, the new index includes 49 fintech companies which represent roughly 18% of the investable domestic financial universe and nearly 4% of the investable domestic equity universe. The distribution of the companies involved, which accounts for approximately $785 billion in total market cap, is nearly exclusively electronic, with limited or no ‘bricks and mortar’, and their revenue mix is predominantly fee-based.
The official statement further states that the index will be rebalanced quarterly and members will be updated annually on the third Friday in December.
The targeted sectors of the new index include banking, asset management, broker/dealer, insurance, financial technology, equity REITs and mortgage finance. The exchange traded funds (ETFs) based on KBW Nasdaq’s indexes provide investors with exposure to the niche-specific sectors within the financial industry without overlapping components or with unwanted securities.
Commenting on the news, Fred Cannon, Global Director of Research at KBW, said: “Technology is changing the way financial services are both created and delivered to the market, and our launch of the KBW Nasdaq Financial Technology Index reflects the investment community’s growing interest in FinTech. KBW has long been recognized as the specialist in financial services, and we are proud to combine our deep-rooted knowledge of FinTech with the expertise of Nasdaq as a leading index provider to bring this unique and innovative index to the market.”
“The KFTX provides a relevant benchmark within the fintech space, which will be valuable to the increasing number of investors closely watching this area,” concluded Cannon.