How and Where to Invest in Future Technology?


Investing in new technology projects has been gaining more and more popularity lately. Most often, it looks like a joint-stock company. It is called a venture capital business. Venture capitalists are investing in future technologies in order to make a profit that is 5 to 10 times the amount spent.

it is safer to contact not with specific companies, but with ETFs – funds that invest immediately in the industry or some set of companies. Opened an account with Interactive Brokers and started choosing funds. In short: An ETF is a fund that includes a specific set of securities. When you buy an ETF stock, you invest immediately in all the companies in its portfolio. This is convenient because the threshold for entering the ETF is much lower than if you had to buy shares of each company in this fund. For convenience, you have to pay a commission that covers the costs of the fund.

How to choose funds and how much you need to invest?

When choosing a fund, follow these criteria:

  1. Specialization of the fund on a specific technology, and not on a wide range.
  2. Methodology for the selection of issuers.
  3. Liquidity.
  4. Adequate spread with which you can buy paper.
  5. The size of the service fee.
  6. Launch date.
  7. The presence of competitors.
  8. Historical quotes.

Here is a list of potential technologies of the future to invest in.

Investing in Drones

Goldman Sachs predicts that by 2020, the cost of drones in the world will exceed $ 100 billion. Drones are used everywhere:

  1. Military – for reconnaissance and military operations.
  2. Consumers are photographers, videographers and just lovers of toys.
  3. Law enforcement agencies – for surveillance and patrolling.
  4. E-Commerce – Amazon Already Delivers Drones Purchases in the UK
  5. Oil and gas sector – for monitoring pipelines.
  6. Construction – for maintenance, surveying, mapping.
  7. Government agencies for rescue missions.
  8. Agriculture – for soil analysis, crop health assessment, pesticide spraying, seed planting and field irrigation throughout the crop cycle.

Now in the drone industry, you can invest with only one narrow-profile fund – ETFMG Drone Economy Strategy, ticker IFLY. The fund tracks its own stock index of companies around the world – US companies account for only 58.67% of the portfolio. All index companies are associated with the unmanned aerial vehicle industry, including manufacturers and suppliers. IFLY launched in March 2016, the fund takes a commission of 0.75% for the management.

Investing in Artificial Intelligence

This sector includes developments in the field of machine learning, neural networks, robotics, face recognition, and speech. Thanks to neural networks, the on-board computer of self-driving vehicles can distinguish a pedestrian from other objects on the highway.

You can invest in artificial intelligence and robotics through several funds: IRBO, ROBO, BOTZ, ROBT.

I liked the IRBO Global Fund, iShares Robotics, and Artificial Intelligence ETF, because It is the latest and launched in August 2018. The cost of service is much lower than that of competitors – 0.47%.

Investing in Biotechnology

Biotech is a modification of biological organisms to meet human needs. Biotechnology and genetic engineering help us in analyzing the genome and treating diseases that are now considered incurable, modifying plants and animals, and solving technical problems with the help of living organisms.

I suggest investing in biotechnology through the SPDR S&P Biotech ETF, an XBI ticker. The fund was launched in January 2006 and invests only in US biotechnology companies. The cost of service is 0.35%.

Investing in Blockchain

The hype has passed around cryptocurrencies, but the technology of distributed data storage has remained and has a wide range of applications, for example, in the field of FinTech and public services.

The blockchain is not just “managing bitcoins”. it is a distributed ledger that makes it easy to record transactions and track assets in a business environment.

The Amplify Transformational Data Sharing ETF, a BLOK ticker, invests in companies that develop or use “transformational data exchange technologies”, focusing on the blockchain. BLOK is looking for companies that develop or implement data exchange technologies, as well as collaborate with such companies. The manager chooses companies around the world – only 47% of the assets are in the United States. Management fee – 0.7%. The fund was launched in January 2018.

Investing in Quantum computing

A quantum computer is a response to the need for accelerated computing devices. Defiance Quantum ETF, QTUM ticker, is looking for companies that are developing quantum technologies. Such technologies include the development and application of quantum computers, the interaction of quantum and traditional computers, hardware and software for machine learning, equipment for packaging semiconductors and integrated circuits, the production and processing of raw materials for quantum computing.

The fund was launched in September 2018 and charges a commission of 0.4% for services.

Investing in Internet of things

The Internet of things is a concept in which everyday things are connected to the Internet to interact with each other or with the external environment. For example, a refrigerator that keeps track of which products are running low and independently buys them in an online store.

The Global X Internet of Things ETF, an SNSR ticker, is investing in companies from the Internet of Things industry worldwide. This industry includes companies that develop wearable technology, smart home, automotive technology, network infrastructure and software, smart metering and energy control devices. The fund was launched in September 2016 and charges a commission of 0.42%.

Investing in Cybersport

Esports is gaining momentum, and prizes for professional gamers are measured in millions of dollars. Alisher Usmanov invested $ 100 million in e-sports in 2015.

Tournaments are sponsored by game makers to draw attention to their games, or external sponsors to reach young audiences. The market volume in 2017 amounted to about a billion dollars worldwide.

ETFMG Video Game Tech, the GAMR ticker, holds shares in companies that support, create or use video games. The fund distributes shares in three groups:

  1. “Only Games” – developers of hardware and software games, including virtual reality companies.
  2. “Not only games” are companies that support developers from the first group.
  3. “Conglomerate” – large companies that actively support the entire industry.

The first two groups receive 90% of the total weight and are distributed by market capitalization relative to the entire index. Conglomerates receive only 10%, which does not allow large companies to dominate. Shares in each segment gain the same weight.

This ETF has a rather high commission – 0.75%. In general, this is quite normal for narrow-profile funds, especially since GAMR has no competitors. The fund was launched in March 2016.

Investing in Virtual and Augmented Reality

Defiance Future Tech ETF, an AUGR ticker, focuses on companies associated with augmented and virtual reality technologies – both in development and commercialization. The fund index finds companies by regulatory documents, analytical reports, and industry publications.

Technologies include artificial intelligence, gaming systems, graphics processors, imaging and touchscreen displays, sensors used to touch, depth or image perception, and software or applications that depend on augmented and virtual reality.

Selected companies initially have equal weight with possible downward adjustments for low-liquidity securities. The fund was launched in August 2018. The cost of service is 0.4%.

Investing in Medical equipment

The iShares US Medical Devices ETF, an IHI ticker, tracks The Dow Jones US Select Medical Equipment Index, which targets US companies that manufacture and distribute medical devices. The fund was launched in May 2006, and the service commission is 0.43%.

Investing in Legal Medical Marijuana

ETFMG Alternative Harvest The ETF, an MJ ticker, tracks companies worldwide engaged in the legal cultivation, production, marketing or distribution of marijuana for medical or non-medical purposes. MJ also owns shares in companies that sell or produce tobacco or tobacco products, fertilizers, plant foods, pesticides or equipment for growing cannabis or tobacco.

The fund may also include pharmaceutical companies that manufacture, sell, or distribute drugs that use cannabinoids. The fund was launched in December 2015, and a service charge of 0.75% is charged.

Investing in Renewable energy

Green technologies are gaining momentum – the use of solar and wind energy in the near future may show good growth.

The Kensho Clean Power ETF SPDR, an XKCP ticker, focuses on US-based companies whose products and services drive innovation in the clean energy industry. The base index is a combination of two subindexes. One index follows companies that produce technologies used in renewable energy sources, and the other follows companies that offer products and services related to such sources.

Investing in 3D printing

3D printing technology is used in architecture, construction, small-scale production, medicine, education, the production of clothes and shoes, for printing jewelry, toys, and souvenirs, in geographic information systems.

3D Printing ETF, ticker PRNT, is the first narrow-profile ETF with a specialization in the 3D printing market. The portfolio of the fund includes shares of companies from the USA, developed countries and Taiwan. The basic index is focused on five different areas of business related to 3D printing: hardware, software, 3D printing centers, scanners, and measuring materials, materials for 3D printing. Directions account for 50, 30, 13, 5, and 2%, respectively. The fund was launched in July 2016, the service commission is 0.66%.

Investing in Cloud computing

Cloud computing is the provision of users of computing resources via the Internet: servers, disk space, databases, network equipment, software, analytics, etc.

The First Trust Cloud Computing ETF, the SKYY ticker, is the only ETF on the market with a unique methodology that focuses on cloud computing. The uniqueness of the methodology is that the fund combines cloud computing companies and technology conglomerates, and equally weighs each type of company in its category. SKYY allocates only 10% of its portfolio to technology conglomerates that simply use cloud computing.

Investing in Cybersecurity

The media regularly writes about user data leaks, and businesses are investing more and more in cybersecurity. With the development of information technology, the need for protection from hackers will grow.

You can invest in cybersecurity through the ETFMG Prime Cyber ​​Security ETF, the HACK ticker, and First Trust NASDAQ Cybersecurity ETF, the CIBR ticker. The cost of service for both 0.6%. I chose HACK because of more liquidity and less spread.

HACK was launched in November 2014 – and this is the first ETF on the market that focuses on cybersecurity. The fund index divides the industry into two types of companies: those that create hardware and software for cybersecurity, and those that offer cybersecurity as a service.

One ETF for All

If for some reason you do not want to buy individual ETFs for potentially interesting technologies or if you do not have enough budget to buy individual stocks, then you can invest in most promising industries through the iShares Exponential Technologies ETF, the XT ticker.

XT invests in nine different areas that are considered “exponential technologies”: big data and analytics, nanotechnology, medicine, networks, energy and environmental systems, robotics, 3D printing, bioinformatics, and financial services. The fund was launched in March 2015, the cost of services is 0.47%.

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