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Offer Your Clients Thematic Exposure with SUBS

1 min read · 213 views Bong-Geun Choi Sep 30, 2022

The Fount Subscription Economy ETF (SUBS) looks to invest in companies that derive a significant portion of their revenues from offering subscription services.

 

How to Position SUBS in Your Clients’ Portfolios

With its focus on companies that are responding to changes in the way that individuals consume products and services, we believe that investors should consider SUBS for a portion of their allocation to thematic funds. 

 

What Is a Thematic?

While there is no absolute definition, a thematic fund often provides individuals with exposure to a disruptive or high-growth trend and the potential to profit from a significant structural change in society.  Investors may choose to invest in thematic portfolios to profit from a theme or express a view or conviction.

 

We believe that SUBS satisfies these criteria for thematic exposure.

 

SUBS: Exposure to Societal Change

Individuals appear to be changing the way that they consume products and services, moving from an ownership to a usership model.  Rather than buying products outright, many individuals are turning to subscription-based models.  Businesses are responding by offering more customized payment options, including subscriptions.[1]

 

SUBS: Exposure to An Industry with High-Growth Potential

Revenues from companies offering subscription-based pricing plans have outpaced comparable companies that do not offer such payment options. Additionally, the performance of these companies has outperformed the S&P 500[2] as a whole and related companies not offering subscription plans.[1]

 

SUBS: Because Your Clients Are Demanding Thematic Exposure

According to a Brown Brothers Harriman study, 85% of global ETF investors plan to increase their exposure to thematic ETFs, and 38% plan to allocate 11-20% to thematics.  The study also noted that assets under management in thematic ETFs reached $285 billion by December 2021.[3]  Your client may be looking for, or receptive to, investing in thematic ETFs.

 

SUBS: Because Spotting a Trend Is Easier Than Picking a Stock

Identifying a trend tends to be easier than picking the right stock.  It is difficult to predict which companies will be successful and which companies will fail.  Therefore, it may be better to hold a portfolio of companies involved in the subscription economy, such as the SUBS ETF.

 

The Fount Subscription Economy ETF (SUBS)

The Fount Subscription Economy ETF (SUBS) seeks to provide investment results that, before fees and expenses, generally correspond to the total return performance of the Fount Subscription Economy Index. The Index was designed to measure the performance of companies engaged in the business of providing subscription services, i.e., companies that sell products or services for recurring subscription revenue.

 


 


[1] For more information, please see the SUBS Investment Case

[2] S&P 500® Index: (registered trademark of The McGraw-Hill Companies, Inc.) is an unmanaged index of 500 common stocks primarily traded on the New York Stock Exchange, weighted by market capitalization. Index performance includes the reinvestment of dividends and capital gains.

[3]   2022 Global ETF Investor Survey, Brown Brothers Harriman, 3/15/22


 

Bong-Geun Choi

Chief Economist

bchoi@fountinvestment.com

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Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about the Fund, please call 855-425-7426 or visit our website at www.fountetfs.com. Read the prospectus or summary prospectus carefully before investing.

Exchange Traded Concepts, LLC. serves as the investment advisor to the Funds. The Funds are distributed by SEI Investments Distribution Co., (SIDCO) 1 Freedom Valley Drive, Oaks, PA 19456. SIDCO is not affiliated with Exchange Traded Concepts, LLC. or Fount Investment Co. Ltd.

Risk Disclosure:

 

Investing involves risk, including possible loss of principal. There is no guarantee the Funds will achieve their stated objectives. In addition to the normal risks associated with investing, international investments may involve the risk of capital loss from unfavorable fluctuation in currency values, differences in generally accepted accounting principles, or social, economic, or political instability in other nations. Emerging markets involve heightened risks related to the same factors, as well as increased volatility and lower trading volume. 

 

The Funds’ concentration in an industry or sector can increase the impact of, and potential losses associated with, the risks from investing in those industries/sectors. For MTVR, the Fund may be concentrated in the entertainment and interactive media & services industries. The entertainment industry is highly competitive and relies on consumer spending and the availability of disposable income for success, which may cause the prices of the securities of companies to fluctuate widely. The prices of the securities of companies in the interactive media & services industry are closely tied to the overall economy's performance. Changes in general economic growth, consumer confidence, and consumer spending may affect them. MTVR may also be subject to the specific risks associated with metaverse companies. These risks include but are not limited to small or limited markets, changes in business cycles, world economic growth, technological progress, rapid obsolescence, and government regulation. Smaller, start-up companies tend to be more volatile than securities of companies that do not rely heavily on technology. Metaverse Companies may rely on a combination of patents, copyrights, trademarks, and trade secret laws to establish and protect their proprietary rights. There can be no assurance that these steps will be adequate to prevent the misappropriation of their technology or that competitors will not develop technologies that are equivalent or superior to such companies’ technology.

 

For SUBS, the Fund may be concentrated in the software industry. Technological changes, pricing, retaining skilled employees, changes in demand, research & development, and product obsolescence can affect the profitability of software companies causing fluctuations in the market price of company securities. 

 

Both Funds are subject to communication services sector risk, which can involve the same risks as being concentrated in the software industry. Network security breaches, potential proprietary or consumer information theft, or service disruption can negatively affect companies’ stock prices.

 

The Funds are non-diversified. The Funds are new and have limited operating histories for investors to evaluate. New and smaller funds may not attract sufficient assets to achieve investment and trading efficiencies. In addition to the normal risks associated with investing, investments in smaller companies typically exhibit higher volatility. 

0 MTVR · SUBS
MTVR · SUBS