Index ETF seeks large- and mid-cap exposure to four disruptive tech industries with future growth potential
As disruptive technology funds resonate with more investors than ever, Horizons ETFs has launched a new index ETF that offers exposure to four key industries driving the sector forward.
The Horizons Global BBIG Technology ETF, which now has both Canadian dollar units (BBIG) and U.S. dollar units (BBIG.U) trading on the TSX, seeks to replicate the performance of the Solactive BBIG Index.
“Over the last year, we have seen the pace of global technological disruption and proliferation accelerate, particularly in several key industries, including those that BBIG offers exposure to,” Horizons ETFs President and CEO Steve Hawkins said in a statement.
The index is designed to provide exposure to the performance of publicly listed large- and midcap equities in four industries, represented by the acronym BBIG:
- Secondary battery – with annual global revenue currently at US$110 billion, according to estimates from Grandview Research, the battery industry is expected to triple to over US$300 billion by 2027;
- Biotechnology – encompassing innovative healthcare sectors such as gene editing, bioinformatics, and biopharmaceuticals, the global biotech market is expected to grow from US$760 billion to more than US$2.4 trillion by 2028;
- Internet – BBIG and its index focuses on companies involved in leading the development of cybersecurity, e-commerce infrastructure, and other types of internet technologies, software, and services;
- Gaming – Grandview Research estimates gaming industry revenues to reach $291.16 billion by 2027, which BBIG aims to get exposure to through investments in video game publishers, producers of hardware used in gaming consoles, e-sports league operators, and companies that are involved in developing augmented and virtual reality technologies.
BBIG’s index uses a proprietary natural language processing algorithm developed by Solactive, ARTIS, to identify companies with significant exposure to the provision of products and services in the four industry categories. Only 10 constituent holdings can be held in each of the four categories, with each holding equally weighted at 2.5% at each selection and review day.
“While the technological revolution has been well underway for quite some time, the Index's focus on the top ten ranked names, according to the ARTIS score in each category, helps ensure a portfolio that is focused on the most promising drivers of innovation,” Hawkins said.
Companies in the index must also meet other requirements. Aside from minimum size and liquidity thresholds, companies in the index must be headquartered in a developed or emerging-market country as defined by Solactive and have a primary listing in a developed-market country. While any stock listed on a local exchange in China is excluded, the index may include dually listed Chinese stocks that trade on Hong Kong exchanges or have an American Depository Receipt in the U.S.
