Investment strategy focuses on the growth potential of digital payment technologies and the global transition to a cashless economy
Legal & General Investment Management (LGIM) has announced the launch of the L&G Digital Payments UCITS ETF (‘the Fund’), which provides investors with exposure to the significant growth potential of digital payment technologies, resulting from the global transition to a cashless economy.
Valued at $58 billion in 2020, the global digital payments market is expected to grow at a 19.4% compounded
annual growth rate between 2021 to 2028.
The L&G Digital Payments UCITS ETF gives thematic exposure to this growth potential, investing across payment acquirer and card issuers, payment gateways and processors, payment technology providers and card-less payment service providers.
The new Fund invests in companies with a minimum free float market capitalisation of $200 million and a
minimum three-month average daily trading volume (ADTV) of $1 million, drawn from a dynamic universe of
more than 150 companies engaged in the digital payments value-chain, leveraging the expertise of Payments
Cards & Mobile, a research and consultancy specialist. Companies in the investible universe have their
primary listing in Developed Markets, South Korea and / or Taiwan. A monthly review ensures that if any
individual company exceeds 15% of the portfolio then the ETF will be reweighted back to equal weighting.
The ETF launch reflects the role of the digital technology in broadening global financial inclusion, while also
supporting several of the UN Sustainable Development Goals (SDGs), including growing industry, innovation,
and infrastructure, decent work and economic growth, and building sustainable cities and communities.
According to the UN, digital financial services, such as digital payments, can help families save money, cope
with shocks, and protect assets against risk, allow government transfers, wages, or pensions to efficiently
reach those who need them most, help small retailers to increase their revenues, and fuel business models
that expand access to low-cost financial services, potentially reaching another 1.6 billion people.
Howie Li, Head of ETFs at LGIM, commented, “The digital payments revolution offers significant growth
potential, underpinned by secular, long-term dynamics including the global shift to e-commerce, greater
adoption of smartphones in emerging markets and developing safe, secure online payments. Investing in this
theme can give investors the opportunity to contribute to the global financial inclusion movement as we seek
to meet the UN SDGs.”
James Crossley, Head of UK Retail Sales at LGIM, added: “We are seeing sustained demand from
investors for targeted exposure to the long-term, structural trends that are changing our world. The launch of
the L&G Digital Payments UCITS ETF expands our successful thematic range, equipping our clients to gain
access to the growth of the cashless economy through a highly liquid product.”
Grand View Research, Market Analysis Report, 2021