Multi-asset investment company Saxo Bank is launching its next equity theme basket focusing on the financial trading industry as it has experienced a historic renaissance in terms of profitability, new clients, potentially a new lasting investor class.
The financial trading theme basket consists of 30 companies across institutional and retail brokerage, financial information, exchange and clearing, electronic bond platforms, and market-making with a combined value of $1.14 trillion. The retail brokerage firms and exchanges have done very well the past year as the pandemic forced many people into lockdowns freeing up time for trading and investing, as sports betting and other leisure activities were impossible.
The median revenue and EPS growth is currently 14.5% and 32.1% respectively showing the impact from the pandemic. The fastest growing financial trading company on revenue is Coinbase Global which had its IPO recently representing another important milestone for the cryptocurrency industry.
Saxo continues building out of theme baskets and the next one will be on semiconductors and rare earth minerals. Besides the current supply bottlenecks, the semiconductor theme is a great long-term investment theme for investors as it plays into the digitalization of the world economy and eventually the IoT (Internet-of-things) theme putting the physical world on the Internet.
The key events to follow for the new financial trading theme basket are the upcoming IPOs of Robinhood Markets and eToro which are two giants in the retail brokerage industry, and then of course rising inflation as it could cause significant trading activity in bonds increasing profitability of institutional brokerage firms.
Last month, Saxo launched a new theme basket focusing on crypto and blockchain companies. This basket provides inspiration and alternatives for investors that want exposure to cryptocurrencies but do not want to own ETNs or physical cryptocurrencies.