Market Overview

Crowdfunding Is The Latest Theme To Get An ETF

Crowdfunding Is The Latest Theme To Get An ETF

In the burgeoning world of thematic exchange traded funds, several funds offer exposure to the fast-growing fintech universe.

That group grew Thursday with the launch of the Amplify CrowdBureau Peer-to-Peer Lending & Crowdfunding ETF (NYSE: LEND).

What Happened

LEND tracks the CrowdBureau Peer-to-Peer (P2P) Lending & Equity Crowdfunding Index. That benchmark “is comprised of companies that 1) operate the platforms that facilitate P2P lending and investment-based crowdfunding, and 2) provide the technology & software that enable the operation of these platforms,” according to Amplify ETFs.

The crowdfunding arena is a rapidly growing segment of the broader fintech space. By some estimates, crowdfunding revenue has increased by more than 50 percent over the past five years.

Why It's Important

LEND holds 33 stocks and its holdings are diverse both in terms of market capitalization of and geography. The new ETF's roster is evenly split between developed and emerging markets while 58 percent of its holdings are mid-cap stocks. Small-cap stocks represent 26 percent of LEND's weight while large caps account for 16 percent.

LEND is top heavy with LendingTree, Inc. (NASDAQ: TREE), Qudian Inc. (NYSE: QD) and LexinFintech Holdings Ltd. (NASDAQ: LX) combining for nearly half the new ETF's weight.

“Crowdfunding is an umbrella term generally referring to the financing method, typically internet-based, by which capital is raised through the solicitation of small individual investments or contributions from a large number of persons, entities or institutions that lend money directly or indirectly to businesses or consumers,” according to Amplify ETFs.

What's Next

Eighty percent of LEND's underlying index is allocated to dedicated peer-to-peer lenders and crowdfunding equity platforms with another 14 percent allocated to software and technology providers. The index has a 5 percent weight to social media platforms and a 1 percent allocation to diversified financial services firms with peer-to-peer lending and crowdfunding operations.

LEND charges 0.65 percent per year, or $65 on a $10,000 investment.

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