BlackRock has launched a new US equity ETF providing multi-thematic exposure to companies that stand to benefit from five ‘breakthrough’ technologies: robotics & artificial intelligence, cybersecurity, cloud & big data, financial technology, and genomics & immunology.
The fund provides exposure to US companies that stand to benefit from five ‘breakthrough’ technologies.
The iShares US Tech Breakthrough Multisector ETF (TECB US) has listed on NYSE Arca and comes with an expense ratio of 0.40%.
The fund is linked to the NYSE FactSet US Tech Breakthrough Index which includes companies incorporated and listed in the US.
To be eligible for selection, constituents must have a float-adjusted market capitalization greater than $500 million and average daily liquidity of at least $2m.
The index screens for companies related to the five breakthrough technologies by using analytics from FactSet including the Revere Business Industry Classification System (RBICS), Revere Hierarchy classifications, FactSet Supply Chain Relationships, and FactSet Fundamentals.
Generally, the index will select firms that derive more than 50% of their total revenue from sub-industries related to a particular theme; however, a company may also be included if it meets other requirements related to absolute annual revenues related to the underlying theme, industry market share, or frequency of certain keywords in its public documents.
Constituents are weighted by float-adjusted market capitalization subject to a company cap of 4% and a floor of 10% for each of the five themes. The index is reconstituted and rebalanced on a semi-annual basis.
There are currently 163 stocks in the index which has two-thirds (68.5%) of its exposure in the information technology sector, followed by communication services (11.8%), healthcare (10.6%), and consumer discretionary (5.1%).
The fund may appeal to investors who wish to align their investments with trends that are shaping the long-term outlook for the global economy, an approach that may leave them less exposed to short-term economic cycles. Additionally, by diversifying across several thematic strategies, an investor runs less risk of being overly exposed to a downturn in any one particular industry.
Thematic investing is one of the fastest-growing trends in the ETF industry with several providers launching single theme funds in recent years.
While there aren’t many multi-thematic ETFs yet, Global X offers a similar fund following the launch of the Global X Thematic Growth ETF (GXTG US) on Nasdaq Exchange in November 2019. This fund, which comes with an expense ratio of 0.50%, tracks the Solactive Thematic Growth Index and allocates its assets across an eligible universe of 17 Global X thematic growth ETFs.