It may be a bumpy ride for Fintech, but the long-term outlook is positive
The fintech industry may return to form in 2023 after last year’s technology rout. The broad weakness in the technology sector may disappear as central banks get a handle on inflation and slow the pace of rate hikes.
During the height of the pandemic, fintech was one of the bright sectors with many investment opportunities. Social distancing measures forced consumers to use fintech products to pay for goods and services, especially online.
Fintech, along with the wider technology sector, lost its mojo as the world slowly returned to its pre-pandemic state. The macroeconomic backdrop of rising inflation and a potential recession only added to the downward pressure.
“Fintech in 2022 was hit by a cyclical sector downturn combined with a sour macroeconomic environment,” a Finextra article so. “In part, the sector was a victim of its own success. After flying high and being one of the most invested sectors in recent years, it was only natural that values would return to reality and adjust to historical norms.”
Nevertheless, fintech still has plenty of growth opportunities in 2023 and beyond. If the sector can turn to the upside again, this opens up opportunities for short-term traders looking to capitalize on the comeback.
“Fintech is still in its infancy, and the opportunities for growth and value creation are enormous,” the article added. “There are incredible innovations on the horizon, and the future is positive. But that’s my long-term view.”
Exploiting the upside in the Fintech industry
Instead of trading multiple stocks representative of the fintech industry, traders can gain increased exposure by using just one fund: Direxion Daily FinTech Bull 2X Shares (FNTC). The funds seek to achieve 200% of the daily performance of the Indxx US Fintech and Decentralized Finance Index, the MVIS US Listed Oil Services 25 Index and the S&P 500 Equal Weight Index respectively.
FNTC tracks the Indxx US Fintech and Decentralized Finance Index, which includes companies that offer technology-driven financial services and facilitate a decentralized financial infrastructure, disrupting existing business models in the US financial industry
The following sub-themes are included in the FNTC: digital payments, point of sale, personal finance software and credit/debit card issuers, tax compliance and backend payment processing software, decentralized finance, enterprise financial solutions and peer-to-peer lending and crowdfunding. Companies involved in business activities related to these sub-themes will be eligible for inclusion. Eligible companies that receive a minimum of 50% of their total revenue from these sub-themes will make up the shortlist.
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