The financial sector often takes a backseat to the titans of Wall Street, but according to Wolfe Research, this earnings season could be a turning point for Fintech companies. Technical analyst Rob Ginsberg believes that the Global X FinTech ETF (FINX) is showing signs of attractiveness after a period of underperformance in the broader market.
With many big bank earnings already released, the focus is now shifting towards Fintech and financial service names. The FINX ETF, with over $300 million in assets, has been on a steady incline with a total return of more than 7% over the past three months. Despite a sharp slide in late 2021, the ETF has been showing signs of a rebound in 2024, making it a potential breakout candidate this earnings season.
Ginsberg points out that the FINX ETF has positive technical signals of its own, including an uptrend off the October low and strong trendline support. This suggests that the ETF is well-positioned to maintain its upward trajectory and potentially outperform expectations.
While most major banks have already reported their quarterly results, many financial companies, including the top holdings in FINX, are set to announce their earnings in the upcoming weeks. One standout is Paypal, a top holding in the ETF, which could provide a significant boost if it exceeds expectations.
Despite the positive outlook, there are potential downsides to consider. Earnings reports could serve as a catalyst for volatility in financial technology stocks and the fund as a whole. Additionally, the FINX ETF carries a relatively high expense ratio of 0.68%, which could impact overall returns for investors.
The Fintech sector appears to be on the cusp of a breakout this earnings season. With positive technical signals, upcoming earnings announcements, and potential catalysts on the horizon, the FINX ETF may present a compelling opportunity for investors looking to capitalize on the growth of financial technology companies.