FinTech-focused funds fell more than 50%
FinTech-focused funds and indices reportedly suffered greater losses than financial or technology ones during 2022.
The Wall Street Journal (WSJ) reported on Tuesday (Jan. 3) that three FinTech-focused funds and indexes saw declines of more than 50% over the year, with the Global X Fintech ETF down 52%, the ARK Fintech Innovation ETF down 65% and the F-Prime Fintech index plummets 71%.
By comparison, over the same 12-month period, the Financial Select Sector SPDR Fund, which tracks the S&P 500’s financial sector, fell 12% and the Nasdaq Composite Index fell 33%, according to the report.
The report attributed FinTech stocks’ woes to the effects of higher interest rates, the demise of pandemic-era growth drivers and the market’s turn toward the idea of ”growth at any cost.”
In addition to these broad trends affecting all FinTech companies, some firms in the sector were hit by changes that had a noticeable impact on the specific services they provide, the report said.
For example, lenders were hit particularly hard by higher interest rates, e-commerce facilitators were hit by a post-pandemic slowdown in online sales growth and stock trading platforms were affected by a drop in trading volume, according to the report.
PYMNTS’ CE 100 Index – which includes both connected financial and technology stocks – ended the year 35.7% lower than it started.
All pillars tracked by the CE 100 index ended in the red for 2022.
As PYMNTS reported Monday (Jan. 2), the pressures that ended up hitting stocks in the CE 100 index included inflation that spilled over the past year, interest rate hikes that weighed on both businesses and consumers, and Wall Street worries about spending. , profits and slowing top-line growth – and how the grand reopening could affect it all.
Similarly, the FinTech IPO index entered the final week of 2022 down 3.7% over the past five sessions and more than 52% lower year-to-date.
As PYMNTS reported on December 22, the specter of continued interest rate hikes is fueling fears of headwinds for the platforms and digital upstarts that promise to “take over” verticals like real estate and rate-sensitive lending and trading.
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