A lot of concern about this ETF on social media as it trades -9% in a month and -16% over the last three months. But remember, ETFs are long-term.
In 2017, the World Economic Forum (WEF) devoted its annual conference in Davos to how drastically technology is likely to shape the world around us. They argued we are on the brink of a fourth industrial revolution in which digital technologies would dramatically alter the way we live in the world. Working from home during the COVID pandemic gave us all a taste of just how close we are to this future.
By the end of the same year, Sygnia introduced its 4th Industrial Revolution ETF (4IR). If the future is as the WEF predicted, supporting companies that would power the revolution makes perfect sense. Selecting a winner from a global platform of unknown tech companies is a full-time job, so backing an ETF that does the legwork ensures you are backing the winners and booting the losers. According to Sygnia, these companies include, “autonomous vehicles, cleantech, drones, 3D printing, robotics, nanotechnology, smart buildings, virtual reality, cybersecurity, space and wearables”.
The index was created by artificial intelligence company Kensho who was acquired by index house S&P Global in 2018, which made access to the index constituents much easier. These days the full list of fund constituents are readily available on the Sygnia website. However, since many of these companies are not well-known, it’s worth a bit of investigation before committing.
Like any ETF, the makeup of the constituents has changed over the past three years. The fund has 406 constituents across various sectors. As expected, the IT and industrial sectors dominate the ETF, but because of the sheer number of constituents, no single company presents a concentration risk.
The biggest holding at 5.4%, is Vuzix (a supplier of wearable display technology, virtual reality and augmented reality). Riot Blockchain is at 2.5% (a blockchain mining company) and Tesla at 1.3% (electric vehicles).
Rounding out the top ten holdings are:
- 3D Systems ~ 1.3% (3D printing machines and materials)
- Microvision ~ 1.3% (laser scanning technology)
- General Motors ~ 1.2% (vehicle manufacturing)
- Blink Charging ~ 1.2% (electric charging)
- Ambarella ~ 1.1% (fabless semiconductor design company)
- Avis Budget Group ~ 1.0% (vehicle rental)
The companies represented in this index are listed all over the world and dominated by information technology (IT).
- Information Technology ~ 32.5%
- Industrials ~ 20.9%
- Consumer Discretionary ~ 19.5%
- Health Care ~ 9.3%
- Communication Services ~ 9.0%
- Financials ~ 3.9%
- Other ~ 4.8
Since this is not a broad-market index, it’s worth treating it like a sub-index in your portfolio. The fund is classified as a high-risk fund with an investment horizon of five years or more. A small addition to your overall portfolio should give you a sense of the nature of this ETF. Once you’ve become better acquainted you could always get more.
|ETF name||Sygnia iTrix 4th Industrial Revolution ETF|
|Issue date||6 December 2017 (+112% since listing)|
|Total investment cost||0.62%|
|ETF Benchmark||Kensho New Economies Composite Index|
|Tax-free savings account||Investment allowed|
|ETF major holdings||View the full list here.|
|Performance 1 year||+48%|
|Performance 3 year||+126%|
At Just One Lap, we are big fans of passive investment using ETFs. In this weekly blog, we discuss ETFs on the local market and the factors you need to consider when choosing an ETF. If you have wondered how one ETF differs from another, this is where you can find out. We explain which index each ETF tracks, what type of portfolio could benefit from holding each ETF, and how the costs will affect your bottom line.
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