Psychedelic Medicine

While the term “psychedelic” might conjure up thoughts of tie-dye, flares, and rock music, psychedelics have come a long way— specifically, from recreational use at raging concerts to carefully monitored research and medical settings where their potential for mental health healing is studied closely. 

In exciting news for the mental health world in particular, psychedelics are just beginning to make a splash in the prescription drug space. 

Case in point: In March 2019, Spravato, a drug produced by the Janssen Pharmaceutical Companies of Johnson & Johnson consisting of esketamine (which is derived from ketamine) was approved by the U.S. Food and Drug Administration (FDA) for treatment-resistant depression. This has been regarded as “the first major advance in the treatment of depression since the late 1980s.” 

For the millions suffering from depression, that’s a big deal. 

As you might have guessed, this new psychedelic drug is not alone on its path to market. 

In August 2017, the FDA granted “breakthrough therapy” status to study MDMA (also known as “ecstasy”) for the treatment of post-traumatic stress disorder. The “breakthrough therapy” designation means that the FDA “will expedite the review of the drug and potential approval.” 

MDMA-assisted psychotherapy is currently in Phase 3 trials— the final phase before FDA approval.

Then, in October 2018, COMPASS Pathways, a London-based biotech company, received FDA breakthrough therapy designation for its study of psilocybin (aka “magic mushroom”) therapy in treatment-resistant depression. According to one analyst, U.S. sales of this compound alone could reach $108 million in 2025 (the expected commercial launch year of the drug) and $3.3 billion by 2031.

These treatments have enormous potential for medical use, so it’s no surprise that there are many psychedelic startups working on innovative treatments for mental health disorders. In September 2020, COMPASS Pathways became the first psychedelic medicine company to go public on a major US exchange. But, it won’t be the last. 

Here’s why you should consider adding psychedelics to your portfolio. 

What is psychedelic medicine?

Psychedelics “are powerful psychoactive substances that alter perception and mood and affect numerous cognitive processes.” They include but are not limited to Lysergic Acid Diethylamide (LSD), Psilocybin or “Magic” Mushrooms, DMT/ Ayahuasca, Mescaline/ Peyote, MDMA (or ecstasy), 25I-NBOMe, better known as N-Bomb, Salvinorin A (or salvia), Phencyclidine (or PCP), Ketamine, and Dextromethorphan (or DXM). 

Psychedelics cause hallucinations and other sensory disturbances. In short, they work by “stimulating, suppressing, or modulating the activity of the various neurotransmitters in the brain.” While they stay in the body for a relatively short period of time, they can have long-lasting psychological effects. 

Psychedelics came into popular use in the 1960s and 1970s but were eventually made illegal, limiting researchers’ access to study them for medical use. LSD was outlawed in the U.S. in 1966, and MDMA was banned in 1985

It wasn’t until the 2000s that the FDA and the DEA began to approve psychedelic research again. Since then, psychedelics have made their way one by one to labs where they are proving their ability to treat mental health issues including depression, suicidal thoughts, PTSD and anxiety.

The advancement of psychedelics have everything to do with advances in science. According to Amanda Feilding, founder of the Beckley Foundation, which investigates psychoactive substances and advocates for global drug policy changes, “The combination of advancing neuroscientific knowledge, modern brain-imaging technology and psychedelics provides a unique microscope to the mind, allowing us to map changes in consciousness to changes in neuronal and physiological activity. This opens up a new universe in which we can explore novel pathways to treat many of our most intractable illnesses, and to expand our understanding of consciousness itself.” 

The more that scientists understand the brain, the greater the potential for psychedelics. 

More and more, the clinical community, regulators and investors alike are open to psychedelic treatments. This is especially true following legalization of medical cannabis, which formally recognized the drug’s therapeutic benefit. Cannabis is now only “fully illegal” in seven states. 

Despite their progress, however, psychedelics drugs are still considered Schedule I drugs, which are defined by the DEA as “drugs with no currently accepted medical use and a high potential for abuse.” A schedule change remains a hurdle for all research firms hoping to bring psychedelics to the mainstream.

That said, prescription psychedelic drugs are likely to take a more expedited path to FDA approval for prescription use than more traditional counterparts, in part because humans have been consuming them for decades. 

Why invest in psychedelics?

The growing momentum for psychedelics is happening in parallel to an escalating mental health crisis worldwide. 

More than 250 million people worldwide are suffering from depression. And those numbers are only expected to get worse. 

In late June 2020, after the arrival of the coronavirus disease 2019 (COVID-19) and resulting global pandemic, 40% of US adults reported struggling with mental health or substance abuse, according to the Center for Disease Control. In another recent study that assessed 402 adult COVID-19 survivors, 55% presented a clinical score for at least one mental disorder, including anxiety (42%), insomnia (40%), depression (31%), PTSD (28%), and OCD (20%). 

Depression is a serious condition that “can dramatically affect a person’s ability to function and live a rewarding life,” according to the World Health Organization. “It is characterized by persistent sadness and a lack of interest or pleasure in previously rewarding or enjoyable activities. It can also disturb sleep and appetite; tiredness and poor concentration are common. Depression is a leading cause of disability around the world and contributes greatly to the global burden of disease.” 

Depression is linked to suicide, which is the cause of death for nearly 800,000 people every year. It’s the second leading cause of death in 15-29-year-olds.

While depression and mental health issues are growing, they are hard to treat effectively. Psychedelics are offering the world new hope.

The excitement for the psychedelics market reflects that enthusiasm. According to a September 2020 report by US News, the estimated market size for psychedelics could be as large as $100 billion. In other words, as startups begin to successfully bring new psychedelic prescription therapies to market, there will be plenty of potential customers hoping for mental health help lined up at the door.

How to invest in psychedelic medicine

As a broad and emerging industry, psychedelics are currently difficult for investors to access. There are only a few public companies in the space, such as COMPASS Pathways, but there are a number of associated firms that are set to benefit from the growth of psychedelic medicine. A search on Magnifi suggests that there are ETFs and mutual funds available to interested investors.

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today. 

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.]


Human Rights

From climate change to women’s rights to anti-discrimination, human rights issues are more pervasive corporate issues than we might think about as we pour our cereal or brush our teeth in the morning. But, whether we think about them or not, human rights issues exist. 

Human rights violations don’t always happen in isolation, but often occur in tandem with other environmental, social and governance (ESG) investing factors. For example, according to an interview in GreenBiz with Lauren Compere of Boston Common Asset Management, beyond environmental degradation, deforestation is strongly correlated with human rights abuses. These issues are more prevalent than one might think in the world of corporate social responsibility programs. 

According to a March 2020 report by Rainforest Action Network (RAN), major banks and brands are failing to stop deforestation and protect human rights, despite public commitments to do so. This is in large part because the fast-moving consumer goods that they make, including non-durable goods such as packaged foods, beverages, toiletries, are strongly linked to deforestation. 

These brands include big names including Colgate-Palmolive, Ferrero, Kao, Mars, Mondelēz, Nestlé, Nissin Foods, PepsiCo, Procter & Gamble, and Unilever. The banks include Mitsubishi UFJ Financial Group, Bank Negara Indonesia, CIMB, Industrial and Commercial Bank of China, DBS, ABN Amro, and JPMorgan Chase. 

The report argues that these brands are complicit in deforestation and human rights abuses in their “sourcing of forest-risk commodities –– including palm oil, pulp, and paper.” (Note that in September 2020, many of these brands collectively launched the Forest Positive Coalition of Action, an initiative to end deforestation.)

How does the RAN report call for change to harmful deforestation and human rights practices? 

For one, it commends the follow through of many European and US banks and investors on their commitments not to finance companies that engage in these abuses. Investors have power to influence even the biggest business entities, and socially and environmental advocates are asking investors to use that power.  

Here’s what you should know about human rights in the modern world, and why you should consider them when building your portfolio.  

What are human rights?

According to the UN, human rights “are rights inherent to all human beings, regardless of race, sex, nationality, ethnicity, language, religion, or any other status. Human rights include the right to life and liberty, freedom from slavery and torture, freedom of opinion and expression, the right to work and education, and many more.  Everyone is entitled to these rights, without discrimination.”

The UN’s Guiding Principles on Business and Human Rights, which were unanimously endorsed in 2011, have two primary goals: (1) “to reaffirm that governments have an obligation to protect against human rights abuses by third parties, including businesses” and (2) “to clarify that all companies have a responsibility to respect human rights.”  These principles provide actionable steps for companies and governments to meet their obligations in protecting and respecting human rights.

These principles are also important for investors. According to the Columbia Center of Sustainable Development’s Five-Pillar Framework, “a key component of sustainable international investment includes promoting and respecting human rights that might be affected by investments.” The UN’s Guiding Principles offer investors a framework from which to assess the human rights advocacy or abuses of the companies they invest in.  

Why consider human rights when investing?

ESG investing factors include human rights, and human rights investing has the power to make an impact. For example, divestment played an important role in the anti-apartheid movement in South Africa. 

Beyond impact, as with other ESG priorities, there is mounting evidence that companies tend to benefit financially when they uphold human rights. So, human rights conscious investments are likely to be more successful. 

Business success is linked to good business practices for a variety of reasons. For one, “reputation is now recognized as a major source of business risk,” according to the 2018 report Good Business: The Economic Case for Protecting Human Rights

But, there are other reasons. Companies that value human rights tend to share a long-term view of success, which they execute over time. Beyond helping to promote worker and stakeholder relations, advocating for human rights also benefits from state-based economic incentives, including public procurement, export credit support, and trade incentives. A commitment to human rights also reduces litigation costs and positions companies in a favorable way as regulatory trends develop. 

In May 2020, the Investor Alliance on Human Rights released an Investor Toolkit on Human Rights. The toolkit provides a framework for investors to assess their investments based on human rights criteria.

But, aren’t companies busy with other things, especially under the stresses of a tumultuous economy? 

It’s quite the opposite. In the midst of a pandemic, companies are suddenly tasked with, in the words of The PRI, “protecting their employees, their suppliers and business partners, customers and the communities they serve,” and how they choose or choose not to do so will influence how they come out of the crisis. 

So, it’s not surprising that in September 2020, BlackRock and Vanguard launched four total new ESG ETFs that screen for human rights issues. These include iShares ESG Screened S&P 500 ETF (XVV), iShares ESG Screened S&P Mid-Cap ETF (XJH), iShares ESG Screened S&P Small-Cap ETF (XJR), and Vanguard ESG U.S. Corporate Bond ETF (VCEB). 

If we consider the global supply chain, human rights aren’t something so separate from our cereal or our toothpaste. For savvy, socially conscious investors, understanding whether the companies they invest in enforce or dismiss human rights with their corporate decisions should be a key factor for consideration.  

How to invest in human rights

ETFs and mutual funds such as those mentioned above make investing with a clean conscience easier than ever. A search on Magnifi suggests there are a number of different ways for interested investors to support this part of the ESG landscape.

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today. 

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.]


Gold

As kids, we buried “secret treasure” in the backyard. We didn’t know then, let alone care, about the state of the economy or the worth of gold. 

These days, we know very well what’s in our investment portfolios and we cringe or breath a sigh of relief as we watch it fluctuate from day-to-day and week to week. So, it’s no surprise these days of economic uncertainty, we might find ourselves dreaming of safely buried treasure once again. 

If you are, you aren’t alone. 

According to a survey by Magnify Money published in July 2020, one in six Americans bought gold or other precious metals in the last three months, and about one in four were seriously considering investing in them. After all, gold tends to hold its value, in part because it has a finite supply. In fact, “gold was one of the highest-performing investments in 2019,” according to a recent article in Forbes.

Interestingly, the COVID-19 pandemic has resulted in a less fluid supply of gold in the marketplace. Around the world, the pandemic has forced mine closures and slowdowns. According to an analyst from CRU Group, in April about 10-15% of gold mines globally were offline, including in South Africa, Peru, Mexico, and Canada.

So, is gold still a good investment? And if so, what’s the best approach? Not surprisingly, there are lots of gold investment options in the modern world, and the most practical ones don’t involve buying and burying it in the backyard.

Why invest in gold?

Gold is understood as a “stable store of value.” Although typically gold doesn’t offer a big return on investment, it tends to hold its value during uncertain times. As a result, gold tends to hold its value during times of financial volatility like what we’re seeing now.

In today’s volatile market, that makes it particularly attractive. 

The value of gold is influenced by inflation and supply. The dollar value of gold moves opposite of the dollar. This is because as the dollar gains, it requires fewer dollars to purchase the same ounce of gold.

This year the value of gold is up significantly, with gold prices hitting a high of $2,089 an ounce on August 7. Although prices have since slipped down slightly, many experts anticipate that gold prices could reach $3,000 within the next 16 months.

How to invest in gold

There are many ways to invest in gold, including:

Physical Gold: Gold bullion is physical gold in the form of coins or bars. Typically, these are sold at a markup by the seller and come in sizes ranging from one gram (approximately 1/31 of an ounce) to 400 ounces. Bullion coins are typically recognizable based on imprints such as the American Eagle, Canadian Maple Leaf, and South African Krugerrand.

Typically, the value of non-bullion coins is based on their rarity, not the amount of gold in them. This is because in 1933, President Franklin D. Roosevelt signed Executive Order 6102, which required Americans to surrender much of their gold to the government for compensation. The collected gold was melted into bar form, making the remaining coins from that era particularly valuable.

Physical gold tends to be liquid for those needing cash, but often must be sold at a discount. Also, it can be difficult to store it safely. But again, while buying actual treasure is appealing and very possible, isn’t the only way to invest in gold.

Gold Exchange-Traded Notes (ETNs) and ETFs: ETNs are “debt instruments tied to an underlying investment” such as a commodity like gold. Gold ETNs enable investors to invest in gold without having to purchase it in physical form, which is much easier for many investors. Gold-backed ETFs are another option. First launched in 2003, these ETFs are securities designed to track the gold price.

Gold Mining Stocks: These are simply investments in companies that mine for gold. While these are not direct investments in gold, they are an investment in the industry.

In times of volatility, gold can be a popular hedge for investors looking to protect their portfolios from wild swings. For those investors interested in gold-backed ETFs and mutual funds, a search on Magnifi suggests that there are a number of available options. 

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today. 

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.]


China

 

China, the first country to deal with COVID-19, has also been the first to see some recovery, with economic indicators mostly back to pre-pandemic levels as of October. 

But the rest of the world has not been so successful.

The financial disruption in China and around the world has made asset prices more appealing. In March, U.S. stocks plunged to three-year lows. Even as COVID raged, however, Chinese stocks remained strong and are coming back even stronger. According to fund flow data from EPFR, “allocation to Chinese stocks among more than 800 funds reached nearly a quarter of their nearly $2 trillion in assets under management.”

China’s momentum is being driven by its economic recovery, making the country an interesting diversification play in the midst of all of today’s volatility. Here is what investors need to know.

What is happening in China’s economy?

China’s new economy, according to BlackRock, is technology and innovation driven, consumption and service-focused and more open with a growing, more urbanized middle class. 

Through 2018, China’s GDP growth averaged 9.5%, which the World Bank described as “the fastest sustained expansion by a major economy in history.” The country’s GDP was US$ 14.140 trillion in 2019 and it’s economy grew by 6.1%. Even with the pandemic, Oxford Economics anticipates a similar 6% GDP forecast for 2020.

Part of this growth is due to increased consumer demand, and a significant shift away from export reliance. In 2012, Chinese consumer spending was $3.2 trillion. This rose to $4.7 trillion in 2017. In December 2019 there was an 8% jump in retail sales and 6.9% growth in industrial production, exceeding analyst’s expectations. 

In other words, China is becoming increasingly self-reliant. 

That said, it still has its sights set on exports. China has a strong, well-educated workforce that will power the technology and advanced manufacturing sectors, which will be a core part of its economic growth. 

China’s Made in China 2025 initiative is a ten-year action plan to bolster manufacturing. Key manufacturing sectors include: New information technology, high-end numerically controlled machine tools and robots, aerospace equipment, ocean engineering equipment and high-end vessels, high-end rail transportation equipment, energy-saving cars and new energy cars, electrical equipment, farming machines, new materials, and bio-medicine and high-end medical equipment.

The plan is focused on (1) improving manufacturing innovation, (2) integrating technology and industry, (3) strengthening the industrial base, (4) fostering Chinese brands, (5) enforcing green manufacturing, (6) promoting breakthroughs in ten key sectors, (7) advancing restructuring of the manufacturing sector, (8) promoting service-oriented manufacturing and manufacturing-related service industries, and (9) internationalizing manufacturing.

But manufacturing is just one component of China’s growing economy. 

According to IBIS World, the 10 fastest growing industries in China include: internet services (27.4%), online games at (27.2%), online shopping (22%), optical fiber and cable manufacturing (20.3%), oil and gas drilling support services (8.6%), satellite transmission services (18.5%), alternative-fuel car and automobile manufacturing (17.8%), meat processing (17.3%), energy efficient consultants (17%), and Chinese medicinal herb growing at (16.6%). In other words, the economy is well-diversified. 

Why invest in China?

According to BlackRock, China is an “opportunity too big to ignore.” 

 Despite the fact that the majority of Chinese companies on the Fortune Global 500 are state-owned, many of its economic leaders are privately owned. For example, COVID-19 related buying benefited Alibaba in the form of a 34% growth rate in its e-commerce business year on year for first quarter of 2020. And Tencent reported a 29% increase in revenue year over year, amounting to $16.2 billion during the second quarter of 2020. 

But privately owned companies aren’t the only ones flourishing.

China Life Insurance, for example, has a market capitalization of roughly $100 billion, making it not only the largest insurance company in China, but also one of the largest in the world. 

According to Nasdaq, state-owned China Mobile offers “income and price appreciation potential.” The company is huge, with “188,000 5G base stations put into service throughout more than 50 Chinese cities.” And it has an annual dividend yield of 5.95%. 

This mixture of publicly and privately owned entities uniquely positions China against economic downturns. For example, rather than directing money to citizens and businesses like the U.S. stimulus, it intervened directly in the labor market by increasing employment in state-owned enterprises (SOEs). 

China’s markets are also poised to grow. According to The Financial Times, “the Chinese economy makes up 16% of the world’s GDP and around 14% of the world’s exports, it still only makes up 5% of the world’s equity markets, despite those markets being home to some of the largest companies in the world by market value. The obvious examples are Tencent and Alibaba, companies it is hard to get through the day in China without using.”

Even though China has challenges like the pandemic and US-China trade war, it’s still on a trajectory for long-term growth. That makes it a good investment opportunity now. 

How to invest in China

With such a broad economy, investing in China as a theme isn’t as easy as buying shares in a few companies. Rather, China-focused ETFs and mutual funds allow investors to get in on the entire Chinese economy without having to pick and choose sectors. A search on Magnifi suggests that there are a number of different options available to investors today.


Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today.

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.]


Green Initiatives

The sky over the Bay Area is covered with a smoke so thick that it is blocking the sun, leaving it orange and ominous. The image (even in a news article) is a wince-worthy reminder that we are in the year 2020, and the world is different.

With a record 900,000 acres of wildfires burning across Oregon, more than 10% of the state’s 4.2 million population have been evacuated, according to the Oregon Office of Emergency Management. That’s a lot of people, and evacuations aren’t anticipated to end there. In total, 12 western states are burning somewhere, with Oregon, California, and Washington most severely impacted. 

“There’s certainly been nothing in living memory on this scale,” describes Daniel Swain, a climate scientist at the Institute of the Environment and Sustainability at the University of California in an interview with the New York Times

Extreme weather is a new reality, and it matters a lot to the future of economies around the world. In January 2020, before the most recent fires, the Bank for International Settlements (an umbrella organization for the world’s central banks) predicted that the disruptive effects of climate change could usher in the next financial crisis. 

This report was not a one off. According to the January 2020 Global Risks Report by the World Economic Forum, the top five global risks are climate-change related. Extreme weather, which includes floods, storms, wildfires and warmer temperatures, is putting millions at risk for food and water insecurity, property and infrastructure damage, and displacement. 

Now, it’s September and we are looking from near or far at the hazy orange sky above the Bay Area wondering: what’s next?

Where climate change was once a theory that people accepted or not in the same way that they preferred cream or not in their coffee, things are changing fast. This is especially true among millennials, who are making no mistake about where their money is being invested, namely into sustainability-oriented funds.

In what might be considered a ray of hope in a strange world, their environmental investment dollars are starting to add up and smash investing records. 

Here’s what environmental investing is and why it has more momentum than ever before. 

What is green investing?

In 2019, “estimated net flows into open-end and exchange-traded sustainable funds that are available to U.S. investors totaled $20.6 billion for the year,” according to Morningstar. “That’s nearly 4 times the previous annual record for net flows set in 2018.” This near exponential growth in investor interest is in part attributed to younger investors with a specific interest in the environment. 

Perhaps even more impressive, in the first quarter of 2020, sustainable investing totaled $10.5 billion, keeping momentum despite the economic downturn ushered in by the pandemic. 

So, where exactly are these dollars going?

It depends. When it comes to Environmental, Social, and Governance (ESG) investments can look much differently from one to the next. 

For one, some investors have a specific interest in “climate change innovators.” According to MSCI, these are companies working to innovate and scale new technologies in a way that solves climate problems in new ways. Beyond investing in the next big technology that might lead us to a net-zero carbon world, investors are looking more and more at the environmental policies of the companies that they invest with across the board. These policies include water management strategies that use water responsibly and the prioritization of protecting biodiversity in corporate operations.  

The relevance of biodiversity to our day-to-day lives is as close as the latest summer “Save the Bees” campaign. Honeybees are crucial for pollinating much of the global food supply, from apples to almonds. It’s estimated that bees are responsible for one of every three bites of food eaten in the United States. In addition to the use of insecticides used for many commercial crops, the destruction of habitat and decline in biodiversity have severely impacted this important species.  

In other words, in today’s world, how businesses do business matters greatly, not only to the environment at large, but also to the long-term value of a company. To address that, companies are putting more effort than ever into describing how they meet sustainability standards in their business operations. 

Why invest in sustainability? 

In a letter to CEOs, Blackrock CEO, Larry Fink describes climate change as “a defining factor in companies’ long-term prospects.” According to Fink, “awareness [of climate change] is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance.” 

Fink anticipates a “significant capital reallocation” into sustainable strategies as millennials, who are currently pushing for institutions to develop sustainable strategies and who will eventually become the policy makers and CEOs of the world. 

In other words, environmentally focused investing is the future. 

Not only is it becoming more popular among millennials, it is paying off for investors. According MSCI, “There is a direct, dollar-value payoff for companies to better manage their ESG risks or meet stated sustainability commitments.” 

Interestingly, since the arrival of COVID-19, awareness to and demand for ESG products is on the rise. Not only did the pandemic accelerate interest in these products, it gave them an opportunity to demonstrate their resilience, with ESG investments less impacted by the pandemic-driven market drop in the spring. 

If you are ready for a certain investment in an uncertain world, environmental investing is a natural choice.

How to invest in green initiatives

The environment, of course, impacts every one of us and touches every industry. Investing in such a broad theme can be challenging for investors. Fortunately, a search on Magnifi suggests that there are a number of ETFs and mutual funds that can help investors access this growing and all-encompassing sector.

 

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today. 

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.]


Electric Vehicles

What was once (not too long ago) a niche sideshow in the automotive market is poised to take over the whole thing, with electric vehicles anticipated to dominate car sales by 2040, according to BloombergNEF’s Electric Vehicle Outlook 2020.

But is the mass adoption of electric vehicles really as far off as 2030, when some projections anticipate that battery-powered cars will start to outsell conventional combustion engines? Or, is the electric vehicle revolution already here?

Right now, the prices of electric vehicle stocks are jumping. Tesla, which is expected to announce new battery technology in September, jumped 13% in one morning in June to an all time high of $1,746.69.  Now, it’s as high as $1,835.64 and looking at the next milestone of $1,900. 

Workhorse, a maker of electric vans, also jumped after it cleared the next hurdle to participation in California’s zero-emission subsidy program. These, in addition to a jump for the Chinese electric vehicle maker NIO, the Chinese electric scooter maker Niu, show the enthusiasm for the EV market. 

And there should be. Here’s why. 

What are electric vehicles? 

All-electric vehicles (EVs) are cars and trucks  equipped with an electric motor rather than a traditional internal combustion engine. The electric motor is powered by a large traction battery pack which requires a charging station or wall outlet to charge. 

Because EVs are powered by electricity, they don’t have the tailpipe that emits exhaust as is typical of internal combustion engines. EVs also do not require liquid fuel components, including a fuel pump, fuel line, or fuel tank. Hybrid vehicles, however, still do have these components, as they typically switch over to an internal combustion engine when the electric battery becomes depleted. 

Why invest in electric vehicles? 

Simply put, electricity is the future of transportation.

EVs have the potential to help slash carbon emissions and lower costs for drivers, which is why public utilities such as Xcel Energy are pushing to get 1.5 million electric cars on the road by 2030.

When investing in EVs, it’s more than a matter of purchasing pricey Tesla stock or not. Lots of companies stand to benefit from the adoption of electric vehicles, from battery manufacturers to companies thinking creatively about how to charge electric vehicles. 

These companies are trying to solve the biggest challenges for electric vehicles that have been stumbling blocks to their mass adoption. Namely, the production of batteries that hold a greater charging capacity for a longer period and the accessibility of charging opportunities. 

For example, a new type of battery—solid-state electrolyte— is scheduled to enter the commercial market in 2023. Solid-state batteries are generating major excitement for electric vehicle makers. The solid version of the battery can hold three times more energy than its traditionally liquid counterpart, not to mention it can hold that energy more efficiently and ultimately last longer. Battery prices are expected to fall as their energy density improves, making electric vehicles increasingly more affordable. 

EVs continue to become more mainstream as they become more affordable and charging equipment becomes more widely available.  Blink Charging, for example, designs, manufactures, and operates an electronic vehicle charging network that is managed by cloud software. According to the company, its EV charging equipment sales increased by more than 350% and its revenues for just the first six months of 2020 surpassed its total revenues for all of 2019. 

But, there’s more to all-electric vehicles than batteries and charging stations. 

Specifically, the list of key components in electric cars is long. In addition to the usual wheels and tires, you also need:

  • A charging port
  • A DC/DC converter
  • An electric traction motor to drives the wheels
  • An onboard charger that accepts energy from the charge port and converts it to charge the battery
  • A power electronics controller to “manage the flow of electrical energy delivered by the traction battery”
  • A thermal system to maintain an appropriate temperature range
  • A traction battery pack to store electricity for the motor
  • An electric transmission 
  • And more…

In other words, a shift from conventional combustion engines to all-electric means a shift to makers of these parts for suppliers. 

For example, Aptiv develops safety systems for electric vehicles. Safety systems are crucial considering the high voltage that powers electric vehicles and the “more than 8,000 connection points in a typical electric vehicle.”

Delphi offers automakers powertrain, electrical and battery management solutions for components including inverters, high-power electrical centers, high-voltage connection systems, combined inverter DC/DC converters (CIDD), high-voltage shielded cables, on-board and plug-in chargers and charging inlets.

Magna offers complete vehicle manufacturing, producing vehicles for BMW, Daimler, Jaguar Land Rover and Toyota. Magna was selected by the Beijing Automotive Group Co., Ltd. (“BAIC Group”) in 2019 to “produce up to 180,000 electric vehicles per year in China…starting in late 2020.”

Amphenol develops and supplies advanced interconnect systems, sensors, and antennas for hybrid and electric vehicles. 

These and other companies are poised for growth and are ripe for investment. 

How to invest in electric vehicles

Electric vehicles will outnumber traditional fuel-powered cars before we know it. Now is the time to get ahead of the curve, before affordable, little known stocks rise to the heights of Tesla. A search on Magnifi indicates that there are a number of ways for investors to access this fast-growing segment via ETFs and mutual funds, rather than focusing only on individual companies.

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today. 

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.]


SaaS

Software-as-a-Service is now standard, from mobile phones and laptops to business solutions for the largest of entities. It seems that there’s an app for everything, and it’s all personalized to each user’s credentials. 

Is your gym closed during Covid-19? Subscribe to Truecoach to build an online training platform for customers. Need to set up an online store, especially with COVID-19 closures? Build one on Shopify. Too busy to make a baby book? Text Queepsake your baby milestones and they’ll make one for you. (Not kidding.)

The solutions are big, small, and endless. 

But, it wasn’t always that way. 

Cloud computing has transformed how users interact with software. Before the software-as-a-service model, users had to purchase their software, either on physical media or via direct download, and had to pay for updates or replacements as technology improved. These days, that’s not how it works. 

Rather than purchase software annually or biannually, users pay for access to the software that they need on a subscription basis. They have credentials and they pay a small fee to accomplish their needs.

This model has transformed how we operate as a society, and it offers a frontier of investment opportunities as software companies strive to create solutions for the next big thing.  

What is SaaS?

Salesforce, which pioneered the software-as-a-service model in 1998 defines software-as-a-service as “a way of delivering centrally hosted applications over the internet as a service. SaaS applications are sometimes known by other names: Web-based software, On-demand software, and Hosted software”

How is this different from previous models?

Consider that hardware is the physical computer or user device. Now consider that software is the programs and apps that help users do things on the computer. 

Before software-as-a-service, customers would buy software housed on a physical source, such as a compact disc. After purchasing, they would take it home, download it to their computer, and then use it. While this utilization of software was helpful, it was also exceptionally hard for companies to update.  

It also wasn’t the most user friendly. For example, if someone was using a tax software before SaaS, they would purchase the software, download it, and input their information. However, every year, they would need to repeat the process in full. Knowing the autofills and recalls of today’s applications, starting from scratch seems tedious and time consuming.

Not to mention that because traditional software is so difficult to update with information, such as the annually revised tax code, for example, users would need to repurchase the software every year. 

Software-as-a-service is different in that it doesn’t require customers to purchase software. Instead, users purchase access to software that’s available on the cloud. 

What exactly is the cloud? It’s a “a vast network of remote servers around the globe which are hooked together and meant to operate as a single ecosystem,” according to Microsoft. 

This type of infrastructure has changed the way software companies administer software, users access and use software, and multiplied the uses and ease of use of software products. For one, SaaS companies can focus on improving their product rather than dedicate energy to producing and marketing new versions. It limits distribution costs like packaging. It also does away with the hassle of administering licenses because the software can only be accessed by paying customers. 

It has also changed payments from one-time to subscription-based. While subscription fees are much smaller from month-to-month than the one-time purchase fees previously were, the fees often add up to more than the cost of the software over the course of the year. 

For companies, pivoting to SaaS has more perks. Because the functions of SaaS have become so familiar and house a user’s data, switching services is often a hassle despite the minimum software cost. This user data can also be leveraged by companies to test new features. 

Why invest in SaaS?

There have been many success stories in SaaS, from Salesforce to Shopify. 

In 2015 at its IPO, Shopify was valued at $1.27 billion. As of spring 2020, it’s valued at $127 billion. Founded by Tobias Lütke and Scott Lake, Shopify started as an online store in 2004 to sell snowboards when they couldn’t find a platform that worked well for them. Now, its e-commerce platform is used by individual sellers and big companies like Google. 

And, the industry is poised to keep growing, especially in the wake of COVID-19

Consider the workforce shift to remote and the Zoom solution, connecting coworkers, families, and even loved ones in nursing homes. Another SaaS platform on the rise is Dynatrace, which provides software intelligence that streamlines user experience and improves business outcomes. 

SaaS companies are solving problems from providing e-commerce solutions for businesses, business solutions that are making remote work scenarios work, to giving users access to platforms that help them do everything from monitoring their finances to staying fit to doing their taxes. 

As the world adopts new post COVID-19 norms, these new solutions are likely to stay in one form or another. 

How to invest in SaaS

Naturally, in an industry as large and diverse as software, picking winners and losers can be challenging. However, for those investors interested in accessing the segment more broadly, there are a number of ETFs and mutual funds available to help streamline the process. A search on Magnifi suggests that there are many SaaS funds available to choose from.

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today. 

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.]


Direct Listing

Once uncharted territory, pursuing a direct listing is becoming less and less an anomaly. “An IPO is no longer a one-size-fits-all path to public,” according to the New York Stock Exchange

A series of recent high-profile IPO failures of companies valued sky-high in the public eye have proven that a successful IPO isn’t guaranteed. Companies like Uber, Lyft, Endeavor, and Peloton all had highly anticipated IPOs that ended in failure. For example, on its first day of trading, Peloton’s stock plunged 11%. Uber’s shares dropped more than 7% on opening day in May 2019, continuing to slide. (Since then, it has recovered to nearly its introductory value.) At the eleventh hour (the day before it was scheduled), Endeavor decided not to go forward with its IPO. What was once the “only way” to go public is proving more and more not to be a foolproof step forward. 

This series of public, lackluster performance seems to be a cautionary tale.  And, while a direct public offering sounds fret with opportunities for things to go wrong, high-profile companies like Spotify and Slack are proving otherwise. 

Here’s what you should know. 

What is a direct listing?

A direct listing or DPO (direct public offering) is a less conventional way to go public. What makes a direct listing so unusual? First, it allows companies to go public without raising capital, making it much different than an initial public offering (IPO). 

In an initial public offering (IPO), companies establish an initial public stock price. By offering public ownership, IPOs are able to raise capital from public investors. To do so, a company will offer a certain amount of new and/or existing shares to investors.

Typically, stocks are sold by one or more banks that act as underwriters. These banks also help to market the company, including to institutional investors on a “roadshow” to the tune of millions of dollars. Institutional investors then filter the shares to the larger market, such as the NYSE, for example. In this somewhat exclusive process, only then do the shares become truly available to the public. 

Following the IPO big debut, early investors are typically barred from selling their shares for 90 to 180 days, also known as a “lock-up period.” This has the potential to limit how much money those investors can make on the sale of their stock, which is determined by how the price of the stock fares in the public market.  

A DPO skips the step of working with an investment bank to underwrite the issue of stock. Rather, “existing stakeholders basically sell their shares to new investors.” In other words, the company doesn’t have to go through the hoops of marketing the company or selling stock to raise cash before the stock goes public. This makes it faster and less expensive than a traditional IPO. It also equalizes the playing field because the stock is openly listed on the market, therefore accessible to everyone. 

It should be stated that once a company is listed, even by way of DPO, the company then becomes subject to the “reporting and governance requirements applicable to publicly traded companies” as mandated by the Security Exchange Commission.

Why are more and more companies choosing DPOs?

By using the less conventional DPO, companies can save a lot of cash— by skipping the IPO process, there is no need to pay banks huge underwriting fees. 

But, even though there are major cost savings, DPOs are not ideal for every company. What happens if the stock for your little-known company arrives on public markets and no one knows what your company is?

The likelihood is, no one will buy it. 

And, without the IPO process, there’s no initial price established by underwriters.  For this reason, companies that pursue a DPO generally have better luck if they have “a lot of money and brand recognition.

Another major perk of a DPO is that there is no lock-up period. For early investors, including employees who may have accepted shares in the early days of a company to offset for a lower startup salary, the opportunity to sell shares right away when the stock might hold the most value is a huge perk. 

To this point, because no new shares are created in advance of trading, the dilution of existing stock value is prevented. 

DPOs are not without risk, however. For one, price volatility, even in the best of circumstances, can be enough to scare companies off.  In a DPO, a reference price is typically established by “buy and sell orders collected by the applicable exchange from various broker-dealers.” However, without the support of underwriters who set an initial price, the stock becomes dependent on market conditions and demand. 

Moreover, because the number of shares available on the market in a DPO is determined by the number of shares that employees and investors choose to list, there can be less control overall. 

Consider Spotify, which successfully pursued a DPO. The stock hit the market at $165.90 in April 2018. On its introductory day, Spotify was ready with a reference price of $132. Even though it had plenty of brand recognition, there was worry that shares flooding the market without a price established by underwriters could lead to a steep fall. 

On its first day on the market, it closed at $149. A little more than two years later, the stock is currently trading at $260.44.

Spotify is not alone in its DPO success, though. Slack had similar success after its direct listing in June 2019.

If an IPO seemed like the bar for startup success before, that’s no longer the case. Earlier this spring, Asana filed to go public via direct listing. Other companies that have been rumored to pursue a direct listing include DoorDash, Airbnb and GitLab. Needless to say, looking forward, it is quite possible (if not probable) that the DPO approach becomes a well-traveled path for companies aspiring to go public. 

Investing in direct listings

For investors, there is functionally little difference between buying shares in an IPO vs. a direct listing. The difference comes in the source of those shares and the way they are priced at the start.

By converting insider ownership shares into publicly-listed stock, pricing on a direct listing can be volatile and a difficult way to access new companies. For investors looking to get into the IPO and DPO market without taking this risk, a search on Magnifi suggests that there are a number of different options in ETFs and mutual funds.

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today. 

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.]


Diversity

There’s a saying that “teamwork makes the dream work.” In the modern world, a diverse team can be the difference between success and failure. These days, employees, customers, and investors alike know that a talented group of people who advocate for the best ideas really get the job done. Usually, those people don’t all look the same. 

Moreover, there are metrics that prove the merits behind the philosophy. 

According to the Wall Street Journal, in 2019, the 20 most diverse companies had an average annual stock return of 10% over five years, compared to 4.2% for the 20 least-diverse companies surveyed. 

The world in 2020, though, is much different than it was a year ago. 

With the disruptions to day-to-day life and business caused by the COVID-19 pandemic, it can be easy for companies to identify goals like inclusion and diversity (I&D) as more “feel-good” than critical to success. Now more than ever, though, the reality is that I&D is crucial to long-term success. 

“Commitment to I&D can help drive innovation, overcome business challenges and attract and retain top talent,” according to BlackRock. Even more, I&D “are critical for business recovery, resilience, and reimagination” according to McKinsey

There’s no denying that a more challenging world means that companies need more effective teams, which require diversity. 

Here’s why investors should put their money where the I&D is. 

What is inclusion and diversity (I&D)?

Diversity “is any dimension that can be used to differentiate groups and people from one another. In a nutshell, it’s about empowering people by respecting and appreciating what makes them different, in terms of age, gender, ethnicity, religion, disability, sexual orientation, education, and national origin.”

Inclusion “is an organisational effort and practices in which different groups or individuals having different backgrounds are culturally and socially accepted and welcomed, and equally treated.”

And, when you put these two together, it sounds like an ideal place to work. 

Why? No company operates in a vacuum— all operate in a diverse and quickly changing world, with global customer bases.

I&D has impacts for employers and employees alike. According to Allianz Global Investors, “Only if people feel included, will they bring their full selves to work and give their best. Only if people feel they can share their different perspectives, will companies fully unlock their potential to innovate and make the best decisions.” 

There is more than one Inclusion and Diversity index, but one of the most popular is the index developed by Refinitiv. Using 24 metrics across four key pillars, Refinitiv ranks over 7,000 companies around the world, identifying the top 100 publicly traded companies. The index’s ranking is based on corporate pillars including diversity, people development, inclusion, news, and controversies. 

A similar index was launched by Universum in 2019. Universum’s index focuses on recruiting for diversity. According to the index, cultural diversity is more complex than gender, age, and ethnicity. Rather, cultural diversity extends itself to include personality traits, socio-economic backgrounds, nationality, work experience, and education.

Why invest in inclusion and diversity?

Diversity and inclusion efforts foster a dynamic business environment, boosts idea generation, and is an indicator of long-term success, all of which are markers of good investment opportunities. 

I&D is proven to have an impact in practice. For example, inclusion and diversity helps companies to reach a global customer base. According to a study by the Harvard Business Review, “A team with a member who shares a client’s ethnicity is 152% likelier than another team to understand that client.” Beyond that, according to the same study, it’s crucial for innovation leaders to encourage employees to share their ideas.

Moreover, investing in I&D can help companies to achieve higher returns.

McKinsey’s Diversity Matters study examined data (including financial results and the composition of top management) of 366 public companies across a range of industries in Canada, Latin America, the United Kingdom, and the United States. The study found that: (1) “Companies in the top quartile for racial and ethnic diversity are 35 percent more likely to have financial returns above their respective national industry medians” and (2) “Companies in the top quartile for gender diversity are 15 percent more likely to have financial returns above their respective national industry medians.”

Measuring diversity and inclusion in practice has its challenges, but also its benefits.

According to Dr. Rohini Anand, Sodexo Corporation’s senior vice president and global chief diversity officer: “For every $1 it has invested in mentoring, it has seen a return of $19.”

The Fluor Corporation measures I&D in employee productivity and engagement, which translates to company performance resulting in “indirect costs or benefits to the company.” 

At MGM Mirage, I&D is measured in human resources, purchasing, construction, corporate philanthropy, and sales and marketing. It even includes editorial coverage about its I&D as having advertising value. 

As diversity becomes more important than ever before on investment reports, portfolio managers are seeing more and more correlated to positive returns. Investing in companies that value I&D is not only a way to identify companies that have an edge on their competition, it is also a way to embrace and promote this value in the corporate world. 

How to invest in diversity and inclusion

Naturally, with a theme as broad as diversity, investing isn’t as simple as picking a few diverse companies and calling it good. For those investors interested in supporting a broad swath of companies that score highly on I&D, a search on Magnifi suggests that there are a number of ETFs and mutual funds to consider.

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today. 

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.]


Intel

Intel (INTC)

The Silicon Valley region of California’s Bay Area got its name in the 1960s as a result of the many semiconductor companies that were established in the area, making the silicon-based chips that were powering the computer revolution. At the forefront of this movement was Intel (INTC), a company founded by two of luminaries of information technology – Robert Noyce, the inventor of the integrated circuit, and Gordon Moore, the developer of “Moore’s law” of technological development – that emerged as an early leader in both SRAM and DRAM memory chips, as well as the x86 series of microprocessors that drove the vast majority of personal computers starting in the 1980s.

Today Intel continues to manufacture processors for mobile and desktop use, as well as computer hardware infrastructure like motherboards, network interface controllers, memory chips, graphics controllers and more. Intel’s primary competitor to this day is AMD, the number-two U.S. maker of integrated circuits.

In 2018, Intel reported more than $70 billion in revenue and employed more than 110,000 people in facilities all over the world.

Rationale

The most direct way to gain exposure to INTC is to buy its listed shares. But there are a number of good reasons for investors to reconsider that approach. As of 2018, Intel remains a world leader in semiconductor development and manufacturing. But it is starting to grip on the world market, recently losing its title of world’s largest semiconductor to South Korea’s Samsung Electronics. What’s more, as mobile computer begins to fully displace traditional desktop and laptop computers, there is less of a need for Intel’s specialized hardware. That pivot is only accelerating and could start to drag down Intel’s long-term growth.

However, rather than buying INTC shares themselves, investors interested in gaining exposure to the information technology and semiconductor sectors might consider buying funds that provide exposure to Intel and its competitors. After all, the return drivers that will benefit INTC might also benefit other similar companies in information technology, computing, and semiconductor manufacturing. As investment management is gradually moving to the construction of portfolios using ETFs and mutual funds in addition to single stocks, investors would do well to consider gain exposure to firms like INTC through these types of funds.

Investing in INTC

A search on Magnifi suggests that investors can gain access to INTC via a number of different funds and ETFs, including those shown below.

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today.

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.]