Web financing

SoFi Unveils ‘Web 3’ Thematic ETF | ETF Strategy

Online personal finance and investment company Sofi Technologies launched a thematic equity ETF targeting companies powering “Web 3,” a future iteration of the internet characterized by blockchain technology, artificial intelligence and the metaverse.

Anthony Noto, CEO of SoFi Technologies.

The ETF SoFi Web 3 (TWEB US) was listed on Nasdaq with an expense ratio of 0.59%.

Looking back at the historical development of the Internet, Web 1 represented the initial collection of links and home pages that could be viewed by users but lacked meaningful interaction. This version of the Internet was primarily about allowing businesses to share essential information.

Web 2 refers to the time when users not only consumed content, but created their own through channels such as blogs, media platforms, and marketplaces. While Web 2 created many “free” services such as search engines, e-mail, e-commerce and social media, the main criticism of this version concerns privacy and security issues for users whose data has been collected on a massive scale by major tech companies.

Indeed, the notion of Web 3 is driven by a desire to combat these privacy and security issues, empowering individuals and moving away from reliance on big tech companies like Amazon, Alphabet, Facebook (Meta), Twitter and Netflix.

Using decentralized operational structures, blockchain technologies, and cryptocurrencies, Web3 aims to put ownership and control of user data back into their own hands. Users will be able to interact with Web 3 through their crypto wallets, allowing them to monetize their data or take it with them when they log out.

Anthony Noto, CEO of SoFi Technologies, said, “SoFi has a unique perspective on how the next generation spends, saves and invests their money given our product line. With this next phase of ETF launch, we are focusing on funds that help people invest well while allowing them to invest in what they are most passionate about right now. We know that many of our members see Web 3 as an important part of the future, and we’re excited to provide a low-cost investment vehicle designed to meet those interests.

Investment approach

The fund is linked to SoFi Solactive ARTIS Web 3.0 Index which selects its constituents from a universe of developed market stocks with market capitalizations greater than $100 million and average daily trading volumes greater than $1 million.

The methodology selects Web 3 companies that derive at least 50% of their revenue from products and services in one of four industry categories: Big Data and Artificial Intelligence, Blockchain Technology, Metaverse and NFT, and Tokenization.

The selection of securities is then guided by SolactiveThe proprietary natural language processing algorithm, called ARTIS, which identifies companies related to a specific topic by filtering publicly available information such as financial news, company profiles and company publications for words appropriate keys.

The index comprises 40 stocks, selecting the ten stocks from each industry category with the highest thematic relevance scores. The four industry categories are weighted equally, and within each category, constituents are weighted according to their rank (the company with the highest thematic relevance score receives a ranking score of 10, the second a score of 9, etc.).

At the end of July, stocks from the United States made up more than three-quarters (76.8%) of the total index weighting, with the other countries most exposed being Japan (8.1%), Canada (6.2%) and the United Kingdom (5.6%).

Notable positions included Vuzix (8.5%), DraftKings (5.0%), Albert (4.8%), GameStop (4.6%), AMC Entertainment (4.6%), Nvidia (4.5 %), Alphabet (4.0%), 1stdibs.com (3.4%) and Hive Blockchain Technologies (3.4%).