How fintech funds have performed in 2020's coronavirus market

By Daniel Lanyon on Monday 6 July 2020

Alternative LendingDigital BankingSavings and Investment

In the first half of 2020 coronavirus's cataclysm brought the longest bull market in history to its knees but stimulus has brought stock markets back into positive territory and fintech funds outperformed.

How fintech funds have performed in 2020's coronavirus market
Image source: Photo by Anna Shvets from Pexels

Funds investing in the fintech trend have largely outperformed the market in the first six months of the year, according to research from AltFi.

The MSCI All Word index, a good proxy for global equities, is up 0.95 per cent year to date.  
 
Funds that invest in the fintech trend have done even better.  
 
Research from AltFi shows our list of fintech funds - which include investment trusts such as Augmentum Fintech as well as active funds such Wellington Fintech, Jupiter Financial Innovation, Axa Framlington Fintech and passive ETFs such as Global X Fintech Thematic have largely beaten returns in global equities. In fact, the latter has clocked up a return after fees of 18.23 per cent. 

Source: FE Analytics
 
Public markets have been fertile ground for the fintech trend when taken more broadly. These funds are investing in very different companies from the startups and scale-ups such as Augmentum to some of the largest listed firms in the world leveraging the fintech trend eg Paypal, Visa etc. 

A key thing to understand is many listed companies are benefitting from fintech disruption and not necessarily, just the disruptors themselves.   

Last year was a barnstorming one for fintech funds too. Among nearly 3000 open-ended funds in the UK’s Investment Association’s universe, fintech was a standout asset class.   

Wellington Fintech, which launched at the end of 2018, returned after fees 44.23 per cent in 2019. This was the sixth-best performance out of the near 3000 portfolios while the likes of Robeco and Axa Framlington’s own fintech funds hit over 30 per cent for the year putting them in the top 5 per cent of funds.  

Tim Levene (pictured), CEO of Augmentum Fintech says whilst  Covid-19 will not define fintech, the economic disruption it has caused has accelerated digital adoption, and investors have recognised that. 
 
"It remains hard for investors to participate in the fintech growth story, and Augmentum Fintech provides one of the few ways public markets investors can participate in it," he said.  
 
"This is doubly important when you see there is less need for fintechs to come to the public markets to raise capital. We are still early in the fintech story, but this is a space which is seeing areas of considerable growth as fintechs seize new opportunities," he added. 

Fintech's secular long term growth story may well continue to boost returns, even as the downturn in the real economy begins to bite.

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