In general, investors are well aware that the quantity of data produced is increasing. At the same time, investors are also well aware that data is an increasingly valuable commodity. As a result, investors are keen to identify market opportunities that capture that growth.
Please enter: the ProShares Big Data Refiners ETF (NYSEARCA:DAT). The new exchange-traded fund (ETF) looks to track the trends, growth and future of data through the key players in the industry.
In 2020 alone 64 zettabytes (six trillion gigabytes) of data was generated. That’s more than 4X greater than the 15.5 zettabytes generated in 2015. By 2025, estimates are that the volume of data generated will reach 181 zettabytes. The growth is there, and that growth is valuable.
Businesses increasingly seek to gain competitive advantages from the insights that big data contains. 92% of Fortune 1000 CEOs surveyed indicated the pace of their big data and AI investments has accelerated.
A Rapid Growth Market
Although it’s clear that the volume of data being produced is rapidly increasing, investors may wonder if there’s money to be made. The answer is a resounding “yes.”
The question is not whether big data will represent an opportunity in the future. Rather, the question is by how much the current opportunity will grow.
According to research conducted by Expert Market Research growth will be massive, even at conservative targets: “The global big data market is supported by the growth of big data and business analytics market, which attained USD 208 billion in 2020. The global big data and analytics market is expected to grow at a CAGR of 10% in the forecast period of 2021-2026 to attain USD 450 billion by 2026.”
ProShares Big Data Refiners ETF
ETFs are of course simply a basket of securities that trade on an exchange, just as a normal stock does. ProShares Big Data Refiners ETF thusly is highly diversified.
DAT provides exposure to 30 individual stocks. Those 30 individual stocks are selected to track the performance of the FactSet Big Data Refiners Index.
A massive advantage of ETFs is they offer lower expense ratios and fewer broker commissions than buying the same stocks individually. DAT shares carry a 0.58% expense ratio, much lower than fees associated with buying the individual stocks that make up the ETF.
What is Big Data, Really?
Mention the notion of big data and it likely conjures up images of unfathomable streams of 1s and 0s, perhaps in a movie-like sequence a-la The Matrix.
Ultimately, that isn’t incorrect, there would surely be a vast stream of 1s and 0s if all big data were somehow put into graphic form. But really, when we talk about big data it refers to “a term that describes large, hard-to-manage volumes of data – both structured and unstructured – that inundate businesses on a day-to-day basis.”
SAS, the analytics firm that defines Big Data in the above manner, also notes that the analysis and utilization of such data is what’s truly important.
That’s what ProShares Big Data Refiners ETF attempts to do. Holding 30 stocks all geared toward making sense of the massive inundation of data generated, DAT tries to make the most out of making sense out of data. Ten of those holdings were chosen from the ETFs parent index, the FactSet Big Data Index. But all of them provide business insight that drives revenues, profitability and growth.
The ETF is highly geared toward the IT sector, with such firms constituting 96.79% of index holdings. Consumer discretionary and industrial firms round out the remainder, at 2.07% and 1.14% respectively.
What Are Investors Getting?
Ultimately, the ProShares Big Data Refiners ETF is a relatively young fund. It began trading publicly on Sept. 30. Since then, it has returned a respectable 5.92%.
Investors will pay a modest 0.58% for management’s services. That’s $58 per $10,000 invested, and a steady secure opportunity in a market growing at a 10% compound rate annually through 2026 at least.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.