Stocks or ETFs for Focusing on Global Digitalization and Innovation

The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

The past year has undoubtedly been one of immense change, and this sentiment has proven to be especially true in the world of technology and finance. The field of technology, which was already growing at a rapid pace prior to the pandemic, was thrown into an accelerated frenzy as a result of COVID-19. The systems in which both companies and individuals operate have undergone radical changes, and are creating broad mega-trends in many markets. 

Given this growth, investors have been looking at new tech stocks in spaces such as e-commerce and digital software to build their portfolios. In 2020, e-commerce sales in the  U.S. grew to $788 billion, an increase of 32% year-over-year.  

U.S. e-commerce sales from Bloomberg Finance L.P. Data as of 3/31/2021. 

Revenue growth in new tech is well illustrated through the O’Shares Global Internet  Giants ETF OGIG. While many of the biggest tech and digital companies did well last year, companies under $100B market cap generated over 80% of portfolio return in  2020. The OGIG ETF capitalized on these companies extremely well, posting a 107%  portfolio performance in 2020. (such favorable performance was attributable to unusually favorable conditions that are likely not sustainable or may not recur). 

Data as of 3/31/2021. OGIG expense ratio, 0.48%. 

Performance data quoted represents past performance and is no guarantee of future results.  Current performance may be lower or higher than the performance data quoted. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. Returns less than one year are not annualized. For the most recent month-end performance, please visit oshares.com. Inception date: 6/5/18

Source: Bloomberg Finance L.P. Data as of 12/31/2020. 

Performance numbers like these demonstrate the power of investing in new tech and focusing on revenue growth. Additionally, a rules-based approach like OGIG allows for a  dynamic and adaptable response which may be crucial for keeping up with rapid change,  and in the words of O’Shares chairman and co-owner Kevin O’Leary, "Digital  transformation of the U.S. economy is accelerating because the pandemic is forcing  companies to change, fast.” 

What Constitutes New Tech? 

New Technology, or emerging technology, refers to digital technology that improves previous processes. The OGIG ETF, tracks the performance of new tech stocks across five  broad categories: 

1. Internet Conglomerates

2. Digital Advertising & Social Media

3. Retail E-Commerce

4. Digital Entertainment

5. Enterprise Software

By looking at these five internet categories, OGIG aims to help traders invest in the innovation and digitalization of the global economy. As stated, industries such as cloud,  digital entertainment, and e-commerce are driving the growth of the tech industry by promoting the current global digitalization. 

Revenue Growth 

Investing in companies with either proven or expected revenue growth is part of a  fundamental investing strategy known as growth investing. OGIG utilizes this strategy through its portfolio which consists of companies with either proven or expected revenue growth. Even for investors and financial professionals who are more interested in picking or trading stocks, OGIG provides something of a shopping list of ideas for companies to look into. 

OGIG’s Top 10 Holdings (As of 3/31/2021)

Some of OGIG’s other high-growth holdings include DocuSign, Shopify, and Pinterest Inc,  and recent dynamic additions to the ETF include top cloud companies Palantir and  Snowflake. 

Pinterest, which falls under the digital advertising and social media category, is a prime example of a new tech opportunity. It demonstrated significant performance over the past twelve months and year-to-date, increasing by 379.47% and 12.34% respectively as of  March 31, 2021.  

Last year, the image-sharing app diversified its user base, ending the year with 459 million users, up 37% from the previous year. Much of Pinterest’s stock growth is tied to the widening of its user base, which was partially tied to the fact that people spent more time online. However, this growth isn’t expected to slow anytime soon. One notable component of the app is its ability to monetize its user base. The platform’s inclusion of images and  “Pinterest boards” act as inspiration for outfits, home decor, weddings, and vacations which lead directly to sales opportunities.

Financial professionals interested in more information can request additional portfolio info here. 

- This sponsored content was created by O’Shares ETFs - 

Before you invest in O’Shares ETF Investments Funds, please refer to the prospectus for important information about the investment objectives, risks, charges and expenses. To obtain a prospectus containing this and other important information, please view or download a prospectus at oshares.com. Read the prospectus carefully before you invest. There are risks involved with investing including the possible loss of principal. 

Companies involved with Internet technology and e-commerce are exposed to risks associated with rapid advances in technology, obsolescence of current products and services, the finite life of patents and the constant threat of global competition and substitutes. 

O’Shares ETF Investments Funds are distributed by Foreside Fund Services, LLC. Foreside  Fund Services, LLC is not affiliated with O’Shares ETF Investments or any of its affiliates. 

Shares of the Funds are not individually redeemable and the owners of Shares may purchase or redeem Shares from each Fund in Creation Units only. The purchase and sale price of individual Shares trading on an Exchange may be below, at or above the most recently calculated NAV for such Shares. 

Market Price returns are generally based on market value at 4:00 PM Eastern time (when NAV  is normally determined), and do not represent the returns you would receive if you traded shares at other times. Fund returns assume that dividends and capital gains distributions have been reinvested in the Fund at NAV.  

Concentration in a particular industry or sector will subject the Funds to loss due to adverse occurrences that may affect that industry or sector. The Funds may use derivatives that may involve risks different from, or greater than, those associated with more traditional investments. A Fund's emphasis on dividend-paying stocks involves the risk that such stocks may fall out of favor with investors and underperform the market. Also, a company may reduce or eliminate its dividend after the Fund's purchase of such a company's securities.  

Returns on investments in foreign securities could be more volatile than, or trail the returns on, investments in U.S. securities. Exposures to foreign securities entail special risks, including political, diplomatic, economic, foreign market and trading risks. In addition, a Fund's investments in securities denominated in other currencies could decline due to changes in local currency relative to the value of the U.S. dollar, which may affect the Fund's returns. See the prospectus for specific risks regarding the Funds. 

Holdings are subject to change and should not be considered investment advice.

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.