Recent months have seen a decline in the stock market due to several contributing factors, including weak economic data, concerns over tariffs, higher-than-anticipated inflation, and apprehensions regarding AI-related capital expenditures. Among major indices, the tech-focused Nasdaq has been the most negatively impacted, with the Nasdaq Composite dropping nearly 15% from its recent peak.
The financial technology sector, commonly known as fintech, has experienced an even more significant downturn. In addition to the aforementioned market challenges, fintech stocks have also been affected by concerns over reduced consumer spending and fears about profit margins within specific fintech businesses.
For instance, leading e-commerce platform Shopify (NYSE: SHOP) has seen its stock value decrease by 26% since mid-February. Payment solutions company Block (NYSE: XYZ) recorded a 42% decline from its 2025 high following a weaker-than-expected earnings report. Similarly, online bank SoFi (NASDAQ: SOFI) witnessed a 35% drop since reaching its January high.
In this volatile environment, selecting individual stocks that could be potential winners is daunting. This situation has brought the Ark Fintech Innovation ETF (NYSEMKT: ARKF) into focus as a potential investment option.
The Ark Fintech Innovation ETF differs from most exchange-traded funds (ETFs), which typically function as passive index funds. Unlike index funds that invest across all stocks within a particular index to mirror its performance, the Ark Fintech Innovation ETF is actively managed by portfolio manager Cathie Wood, aiming to outperform a benchmark index. This approach allows a combination of small and large companies among its top holdings, rather than concentrating solely on the largest industry players.
As of March 30, 2025, the ETF’s top 10 positions are diverse, including companies like Shopify, Coinbase, and Robinhood, among others, bearing different market capitalizations. This diversity provides exposure to various sectors within fintech, such as e-commerce, cryptocurrency, payment processing, financial applications, and cybersecurity.
However, investors should be aware of certain risks. One significant concern is the expense, as the Ark Fintech Innovation ETF has a 0.75% expense ratio, which is higher than most passive funds but comparable to other actively managed ETFs. The fund is also relatively concentrated; despite having 37 stocks, the top 10 holdings account for almost 55% of its assets, meaning that significant fluctuations in large holdings like Shopify or Coinbase could considerably impact the fund.
Investing in rapidly developing technologies, including fintech, inherently involves risk, and even mature companies in the fund’s portfolio, such as Meta Platforms (NASDAQ: META), can exhibit short-term volatility. Nonetheless, the current market weakness presents an opportunity to acquire some promising fintech stocks at a discount. The Ark Fintech Innovation ETF offers a consolidated investment option featuring leading entities in the fintech sector, especially with the Nasdaq still in a corrective phase.
