SoFi (NASDAQ:SOFI) has plans to deliver a new thematic Exchange Traded Fund (ETF) focused on Web 3.0. It’s said that the ETF’s focal point will be concepts such as artificial intelligence & big data, blockchain, NFTs, and tokenization. The ETF’s stock selection mandate is passive and emphasizes a high conviction strategy. This means that the fund will invest with a long-term goal and rebalance its portfolio of 40 stocks on a semi-annual basis at low transaction costs.
There are a few things I like about SoFi’s Web 3.0 concept. First of all, it’s emphasizing modern ideas that apply to just about every industry. For example, the integration of big data analysis and smart contracts is a must-have for companies looking to gain a competitive economic advantage.
Secondly, the ETF emphasizes South Korean stocks as a critical target. For those who’re not aware, South Korea’s information technology sector has established itself as one of the world leaders amid robust growth in software and hardware manufacturing activities. Furthermore, by targeting South Korean stocks, SoFi will include a range of growth assets in its portfolio that could provide it with a competitive advantage over other technology ETFs that could be more inclined to invest in mainstream tech stocks.
The final reason why I like this ETF is simply because of its management strategy. It’s been proven repeatedly that passive investing beats active trading, and according to SoFi’s prospectus, it intends to do just that.
Technology stock returns are extremely volatile and difficult to forecast in the near term, but one thing we do know is that they provide exponential returns in the long run. I see SoFi’s Web 3.0 theme as a proxy to Cathie Wood’s ARK Innovation Fund (NYSEARCA:ARKK), with the main difference being that SoFi’s Web 3.0 product will have a better risk-return profile, thus possibly emulating and sustaining the bull runs we saw from ARK Innovation before its ultimate capitulation.
On the date of publication, Steve Booyens did not hold any position (either directly or indirectly) 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.
