Visa (V) is a financial services company that oversees a worldwide network of electronic fund transfers, through its Visa-branded credit cards, debit cards and prepaid spending cards. The company is an intermediary, working with banks and other financial institutions to offer Visa-branded financial services products for their customers. It was created in 1958 as a Bank of America spinoff, which first introduced the idea of an all-purpose credit card that could be used at a variety of merchants, rather than the revolving credit accounts that were popular at the time but limited in their use.

Visa’s products generally break down into three categories: debit cards, credit cards and prepaid cards. It also operates the Plus network of ATM machines as well as the Interlink EFTPOS point-of-sale network. In addition, Visa provides direct commercial payment solutions for a range of B2B users and, in 2014, partnered with Apple to support the iPhone maker’s Apple Wallet spending feature.

Visa operated the world’s largest card payments network until 2015, when it was surpassed by UnionPay, a Chinese credit card processor. Today the company has operations worldwide and processes more than 100 billion transactions every year. As of 2018, its revenues were more than $20 billion on a $280 billion market cap.

Rationale

The most direct way to gain exposure to Visa is to buy its listed shares. But investors have good reason to reconsider that approach given Visa’s exposure to the global financial system as a whole. As the second-largest financial services network operator in the world, V grows alongside overall global growth. But, when that consumer spending slows, so does Visa’s long-term growth plans.

However, for investors interested in gaining exposure to the financial services sector, rather than buying V shares themselves should consider buying funds that provide exposure to Visa and other similar firms. After all, the return drivers that will benefit V might also benefit other similar firms in financial services that are better diversified. 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 Visa through these types of funds.

Investing in V 

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

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