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May 28, 2021

LGIM launches Europe’s first digital payments ETF

By Mohamed Dabo

Legal & General Investment Management (LGIM) has launched a new Exchange Traded Fund (ETF) in Europe providing exposure to companies poised to benefit from the global transition to a cashless economy.

An ETF is a type of investment fund that can be traded on an exchange like a stock, meaning it can be bought and sold throughout the day.

The L&G Digital Payments UCITS ETF has listed on the London Stock Exchange in US dollars and pound sterling, and on Xetra and Borsa Italiana in euros.

The new payments ETF aims to exploit the significant growth potential from the global transition to a cashless economy.

The fund draws from a pool of more than 150 companies engaged in the digital payments value-chain.

A booming sector

Currently valued at approximately $58bn, the global digital payments market is expected to grow at a 19.4% compound annual growth rate between 2021 and 2028, according to market research consultants Grand View Research.

Secular trends driving this growth include the penetration of mobile phones globally, an increasingly tech-focused consumer population, the rise of e-commerce and other digital-payment-focused industries such as online gaming, and the introduction of peer-to-peer payment systems.

The digital payments industry is also expected to benefit from government support due to its ability to greatly improve tax collection.

Alongside this, LGIM notes, that digital payment technology is helping to broaden global financial inclusion while also supporting several UN Sustainable Development Goals including promoting innovation, building infrastructure, and enhancing economic growth.

Digital financial services also help families to save money, protect assets against risk, allow the efficient government transfer of wages and pensions, and help small retailers increase their revenues.

Strong demand from investors

LGIM head of UK retail sales James Crossley said: “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.”

LGIM said that the ETF launch supports several of the UN sustainable development goals. It includes growing industry, innovation, and infrastructure, decent work, and economic growth, and building sustainable cities and communities.

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