atonrâ fintech certificate
ATONRÂ FINTECH CERTIFICATE The AtonRâ Fintech Index is a long-only, USD-based, actively managed total return index. The pace of innovation in financial technology (Fintech) has been accelerating lately with notably the emergence of mobile payments. This is just the beginning of a secular trend as technology and digitalisation are likely to reshape the financial industry with applications ranging from robo-advisers, P2P lending and money remittances to blockchain. Banks and insurers will have no choice but to invest heavily as Fintech is expected to spark major operating efficiencies through increased automation and is also likely to lift the financial industry's revenue outlook through enhanced customer experience and engagement. The investment universe is naturally composed of Internet and mobile financial platforms, payment networks and processors and hardware and software vendors (cybersecurity, biometrics, chips). It can also include more traditional companies whose business model shifts thanks to Fintech innovations.
Main Features Asset Class Inception Date Currency Type of Return ISIN Issuer Issue Price Last Price Sharpe Ratio Correlation Beta Benchmark
Equity 7-Jun-17 USD Total Return XS1365787230 NATIXIS 100.0 127.5 2.50 0.72 1.26 MSCI World Net Return
MONTHLY RETURNS (%) JAN FEB 2018 11.9% -3.2% 2017
MAR
APR
HIGHS/LOWS
MAY
JUN
JUL
AUG
SEP
OCT
-1.4%
6.0%
2.1%
3.1%
5.8%
Date
131.7
31-Jan-18
All Time Low
98.1
4-Jul-17
0.9%
DEC 0.3%
134 130 126 122 118 114 110 106 102 98
ANNUAL 8.3% 17.8%
07-06-17 21-06-17 05-07-17 19-07-17 02-08-17 16-08-17 30-08-17 13-09-17 27-09-17 11-10-17 25-10-17 08-11-17 22-11-17 06-12-17 20-12-17 03-01-18 17-01-18 31-01-18 14-02-18 28-02-18
Price
All Time High
NOV
February 2018 highlights The AtonRâ Fintech certificate fell 3.2% in February, outperforming the MSCI World Net Return by 1%. Year-to-date, it outperforms its reference index by 7.4% and launch-to-date (June 7, 2017 launch), it outperforms by 16.4%. We have long been arguing that the easing regulatory environment in the US for fintech companies was likely to accelerate their expansion, considering that any federal or multi-state banking license granted to a fintech would improve its brand strength and customer confidence and let it offer new financial products and services. Good news, the regulatory environment keeps easing at a fast pace. While a couple of startups and fintech heavyweight Square have already applied for a federal banking license, bank regulators in seven US states just came up with a standard licensing process for money service businesses in an attempt to make it easier for startups to operate across several states. As a reminder, startups operating without a federal license have to apply individually to operate in each of the 50 US states, which represents a huge regulatory and administrative burden. With an equally supportive environment in Europe (Lithuania notably offers a specialized banking license with the euro zone’s lowest initial capital requirement - EUR1m - and fastest issuance process - 3 months – see our December report for more details), it’s no wonder that venture capital firms pour a lot of money in the fintech space and that fintech companies spend a lot of money on their infrastructure. Recent examples include the Virgin Money digital bank in the UK that is expected to see the light of day in the second half of the year (Virgin Money spent £38m in 2017 on the technology backbone) and Orange Bank in France (EUR100m investment in 2017 and a total of EUR500m to be invested over the next 10 years). With this spending binge is just getting started, we stick to our view that one of the most astute ways to benefit from it is to invest in financial software vendors that address both fintech pure players and startups and legacy financial institutions seeking to accelerate their digital shift. Talking about financial software, Swiss vendor Temenos was in the spotlight last month as it announced the £1.4bn takeover of Fidessa, a British trading software company. While the outcome of the proposed transaction is uncertain (Fidessa is trading slightly above the offer price as activist investor Elliott Management claims the bid is too low), this move has naturally softened M&A speculation on Temenos, which was reportedly targeted by Japanese Tech conglomerate Softbank. Overall, 2018 has started on a strong footing for M&A in the Fintech space with three major transactions announced until now totaling $11bn (DST acquired by SS&C, Blackhawk by a private equity and Fidessa by Temenos). Given strong business momentum and a promising outlook, the trend is likely to keep going in coming quarters.
AtonRâ Partners SA 12 rue Pierre Fatio - 1204 Geneva - Switzerland - +41 22 310 15 01 - http://www.atonra.ch
ATONRÂ FINTECH CERTIFICATE Top 3 Performers
Worst 3 Performers
Name
Name
GREEN DOT CORP-CLASS A BOTTOMLINE TECHNOLOGIES (DE) AMAZON.COM INC
TEMENOS GROUP AG-REG PAYPAL HOLDINGS INC LENDINGTREE INC
Top 3 Holdings Name SQUARE INC - A LENDINGTREE INC PAYPAL HOLDINGS INC
Geographical Breakdown
Currency exposure
Asia Pacific
4.5% 2.2% 2.9% 9.6%
5.1% 14.1% Europe
80.8%
US
80.8%
Asset Allocation
CHF AUD
Equities
JPY
Cash
EUR USD
99.1%
Important Information All net estimated returns are based on unaudited, internally prepared assessments and have not been independently verified. The net estimated returns are subject to adjustments as a result of changes or delays in AtonRâ's calculations of the profit and loss of the portfolio. Any such adjustments could have a material impact on the estimated net returns of the AtonRâ Basket. Net returns are reported after deduction of AtonRâ's management and/or performance fees. Past performance is not indicative or a guarantee of future results. Investment losses may occur, and investors could lose some or all of their investment. Although AtonRâ Partners SA believes that the information provided in this document is based on reliable sources, it cannot assume responsibility for the quality, correctness, timeliness or completeness of the information contained in this report. The information contained in these publications is sent to you by way of information and cannot be divulged to a third party without the prior consent of AtonRâ Partners. It cannot be considered under any circumstances as an offer to sell, or a solicitation of any offer to buy financial instruments. Any indices cited herein are provided only as examples of general market performance and no index is directly comparable to the past or future performance of the Certificate. It should not be assumed that the Certificate will invest in any specific securities that comprise any index, nor should it be understood to mean that there is a correlation between the Certificate’s returns and any index returns. Any material provided to you is intended only for discussion purposes and is not intended as an offer or solicitation with respect to the purchase or sale of any security and should not be relied upon by you in evaluating the merits of investing in any securities.
AtonRâ Partners SA 12 rue Pierre Fatio - 1204 Geneva - Switzerland - +41 22 310 15 01 - http://www.atonra.ch
Main Features Asset Class Inception Date Currency Type of Return ISIN Issuer Issue Price Last Price Sharpe Ratio Correlation Beta Benchmark
Equity 7-Jun-17 USD Total Return XS1365787230 NATIXIS 100.0 127.5 2.50 0.72 1.26 MSCI World Net Return
MONTHLY RETURNS (%) JAN FEB 2018 11.9% -3.2% 2017
MAR
APR
HIGHS/LOWS
MAY
JUN
JUL
AUG
SEP
OCT
-1.4%
6.0%
2.1%
3.1%
5.8%
Date
131.7
31-Jan-18
All Time Low
98.1
4-Jul-17
0.9%
DEC 0.3%
134 130 126 122 118 114 110 106 102 98
ANNUAL 8.3% 17.8%
07-06-17 21-06-17 05-07-17 19-07-17 02-08-17 16-08-17 30-08-17 13-09-17 27-09-17 11-10-17 25-10-17 08-11-17 22-11-17 06-12-17 20-12-17 03-01-18 17-01-18 31-01-18 14-02-18 28-02-18
Price
All Time High
NOV
February 2018 highlights The AtonRâ Fintech certificate fell 3.2% in February, outperforming the MSCI World Net Return by 1%. Year-to-date, it outperforms its reference index by 7.4% and launch-to-date (June 7, 2017 launch), it outperforms by 16.4%. We have long been arguing that the easing regulatory environment in the US for fintech companies was likely to accelerate their expansion, considering that any federal or multi-state banking license granted to a fintech would improve its brand strength and customer confidence and let it offer new financial products and services. Good news, the regulatory environment keeps easing at a fast pace. While a couple of startups and fintech heavyweight Square have already applied for a federal banking license, bank regulators in seven US states just came up with a standard licensing process for money service businesses in an attempt to make it easier for startups to operate across several states. As a reminder, startups operating without a federal license have to apply individually to operate in each of the 50 US states, which represents a huge regulatory and administrative burden. With an equally supportive environment in Europe (Lithuania notably offers a specialized banking license with the euro zone’s lowest initial capital requirement - EUR1m - and fastest issuance process - 3 months – see our December report for more details), it’s no wonder that venture capital firms pour a lot of money in the fintech space and that fintech companies spend a lot of money on their infrastructure. Recent examples include the Virgin Money digital bank in the UK that is expected to see the light of day in the second half of the year (Virgin Money spent £38m in 2017 on the technology backbone) and Orange Bank in France (EUR100m investment in 2017 and a total of EUR500m to be invested over the next 10 years). With this spending binge is just getting started, we stick to our view that one of the most astute ways to benefit from it is to invest in financial software vendors that address both fintech pure players and startups and legacy financial institutions seeking to accelerate their digital shift. Talking about financial software, Swiss vendor Temenos was in the spotlight last month as it announced the £1.4bn takeover of Fidessa, a British trading software company. While the outcome of the proposed transaction is uncertain (Fidessa is trading slightly above the offer price as activist investor Elliott Management claims the bid is too low), this move has naturally softened M&A speculation on Temenos, which was reportedly targeted by Japanese Tech conglomerate Softbank. Overall, 2018 has started on a strong footing for M&A in the Fintech space with three major transactions announced until now totaling $11bn (DST acquired by SS&C, Blackhawk by a private equity and Fidessa by Temenos). Given strong business momentum and a promising outlook, the trend is likely to keep going in coming quarters.
AtonRâ Partners SA 12 rue Pierre Fatio - 1204 Geneva - Switzerland - +41 22 310 15 01 - http://www.atonra.ch
ATONRÂ FINTECH CERTIFICATE Top 3 Performers
Worst 3 Performers
Name
Name
GREEN DOT CORP-CLASS A BOTTOMLINE TECHNOLOGIES (DE) AMAZON.COM INC
TEMENOS GROUP AG-REG PAYPAL HOLDINGS INC LENDINGTREE INC
Top 3 Holdings Name SQUARE INC - A LENDINGTREE INC PAYPAL HOLDINGS INC
Geographical Breakdown
Currency exposure
Asia Pacific
4.5% 2.2% 2.9% 9.6%
5.1% 14.1% Europe
80.8%
US
80.8%
Asset Allocation
CHF AUD
Equities
JPY
Cash
EUR USD
99.1%
Important Information All net estimated returns are based on unaudited, internally prepared assessments and have not been independently verified. The net estimated returns are subject to adjustments as a result of changes or delays in AtonRâ's calculations of the profit and loss of the portfolio. Any such adjustments could have a material impact on the estimated net returns of the AtonRâ Basket. Net returns are reported after deduction of AtonRâ's management and/or performance fees. Past performance is not indicative or a guarantee of future results. Investment losses may occur, and investors could lose some or all of their investment. Although AtonRâ Partners SA believes that the information provided in this document is based on reliable sources, it cannot assume responsibility for the quality, correctness, timeliness or completeness of the information contained in this report. The information contained in these publications is sent to you by way of information and cannot be divulged to a third party without the prior consent of AtonRâ Partners. It cannot be considered under any circumstances as an offer to sell, or a solicitation of any offer to buy financial instruments. Any indices cited herein are provided only as examples of general market performance and no index is directly comparable to the past or future performance of the Certificate. It should not be assumed that the Certificate will invest in any specific securities that comprise any index, nor should it be understood to mean that there is a correlation between the Certificate’s returns and any index returns. Any material provided to you is intended only for discussion purposes and is not intended as an offer or solicitation with respect to the purchase or sale of any security and should not be relied upon by you in evaluating the merits of investing in any securities.
AtonRâ Partners SA 12 rue Pierre Fatio - 1204 Geneva - Switzerland - +41 22 310 15 01 - http://www.atonra.ch
