Wolfe Research predicts growth in fintech sector
Wolfe Research anticipates substantial growth for the financial sector during the current earnings period. The Global X FinTech ETF (FINX), though historically lagging behind the general market, is showing promising projections with recent robust earnings reports from heavyweight institutions like JP Morgan, Goldman Sachs, and Morgan Stanley.
The possible upward trend has piqued the interest of investors, earmarking FINX as a possibly profitable portfolio addition. This offers a glimpse of a strong resurgence within the financial sector after the pandemic’s adversities.
Given the predicted economic recovery, the FINX ETF provides an appealing prospect, with its diversified portfolio of forward-thinking financial technology firms. This, coupled with strong business progress makes the financial sector a potentially lucrative space for astute stock pickers, despite the volatile market conditions.
According to Rob Ginsberg, a technical analyst at Wolfe Research, fintech and financial service companies are well-placed to regain momentum.
Growth projection in fintech sector
Ginsberg believes continuous innovation in these industries essential for sustainable growth and adapting to the fast-paced digital transformation.
Encouraging companies to adapt in the surge of digital services during the pandemic, he emphasized that building digital capabilities opens up opportunities for expansion. Consequently, Ginsberg anticipates fintech companies will maintain profitability even when faced with market unpredictability.
Notably, the FINX Fintech ETF, currently managing over $300 million in assets, despite a significant dip end of 2021, has returned over 7% in the last quarter. Forecasted recovery by 2024 alongside considerable returns makes it a compelling investment option for those eyeing long-term growth in the escalating world of fintech.
Bearing in mind that these heavyweight companies significantly sway the trajectory of FINX, unexpected performance outcomes from these companies, whether positive or negative, may lead to severe fluctuations in FINX. Thus, making it critical to stay abreast of financial updates.
In terms of technical indications from the ETF, Ginsberg has asserted a consistent uptrend since the low point in October as a strong symbol of investor optimism. However, Ginsberg also cautioned risks attached to investing in such spaces like a potential downward trend in fintech stocks, as well as the fund’s high expense ratio at 0.68% compared to other funds.
In conclusion, while the possible returns from investing in the fintech sector appear substantial, Ginsberg’s advisory provides a necessary reality check on the inherent risks and emphasizes the importance of meticulous analysis.
