Investment strategy focuses on the growth potential of digital payment technologies and the global transition to a cashless economy
27 May 2021
Legal & General Investment Management (LGIM) today announces 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 20281. 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 people2.
The L&G Digital Payments UCITS ETF is listed on the London Stock Exchange, Deutsche Börse and Borsa Italiana. The Fund is categorised as article eight under the EU’s Sustainable Finance Disclosure Regulation (SFDR).
The fund is the latest addition to LGIM’s existing thematic range, taking it to 11 specialist funds, covering a number of disruptive technology themes, such as the $2.53 billion L&G Cyber Security UCITS ETF, the $772m L&G Battery Value-Chain UCITS ETF and $1.20 billion L&G ROBO Global Robotics and Automation UCITS ETF3.
Howie Li, Head of ETFs at LGIM: "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: "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."
Established in 1836, Legal & General is one of the UK's leading financial services groups and a major global investor, with over £1.2 trillion in total assets under management* of which 39% is international. We have a unique and highly synergistic business model, which continues to drive strong returns. Legal & General provides powerful asset origination and management capabilities directly to clients, which also underpin our leading retirement and protection solutions. We are a leading international player in Pension Risk Transfer, in UK and US life insurance, and in UK workplace pensions and retirement income. Our purpose is to improve the lives of our customers and create value for our shareholders. Through inclusive capitalism, we are investing in long-term assets, such as real estate and infrastructure, that can help build a better society for the future.
*as at HY 2023
Legal & General Investment Management
LGIM is one of Europe’s largest asset managers and a major global investor, with total assets under management of £1.16 trillion1 ($1.47tn, €1.35tn, CHF 1.31tn). We work with a wide range of global clients, including pension schemes, sovereign wealth funds, fund distributors and retail investors.
For more than 50 years, we have built our business through understanding what matters most to our clients and transforming this insight into valuable, accessible investment products and solutions. We provide investment expertise across the full spectrum of asset classes including fixed income, equities, commercial property, and cash. Our capabilities range from index-tracking and active strategies to liquidity management and liability-based risk management solutions.
1 Data as at 30 June 2023. Data combines assets under management by LGIM in the UK, LGIMA in the US and LGIM Asia in Hong Kong.
Assets under management include securities and derivatives positions
*as at HY 2023