Investment Capabilities


Invest Thematically in New Economy ETFs

As emerging technologies reshape the global economy at a breath taking pace, ‘New Economies’ are being created that upend more traditional industries. The World Economic Forum has dubbed this the Fourth Industrial Revolution, during which the means of production are characterized by technologies that blur the lines between the physical, digital, and biological spheres.1


Position for the New Economy


Merging Characteristics of Man and Machine

This New Economy we live in today merges the characteristics of man and machine. This is driven by:

  • Artificial intelligence
  • Hyper connectivity
  • Exponential processing power
  • Robotics and automation
  • Democratized infrastructure

Smart Cities. Self-driving Cars. Space Travel.

The New Economy creates new opportunities for investors. Every day, traditional sectors and industries are transforming as innovation and artificial intelligence (AI) create technological shifts in our modern economy. These shifts will impact everything from where we live and the jobs we do to the food we eat and how long we live.


What are the New Economy Sectors?


Smart Transportation

From ridesharing to flying taxis, autonomous vehicles present an enormous opportunity for growth. McKinsey & Co. estimates that shared mobility and autonomous vehicles will garner 73% market share of the automobile industry, driving that industry’s growth over the next decade.2


Future Security

From drones to cybersecurity, AI is changing every aspect of war. In response, the line between technology and defense is blurring, with worldwide spending on militarized AI projected to rise to $118 billion by 2023.3


Intelligent Infrastructure

An estimated $4.6 trillion in infrastructure spending is needed to fix America’s aging infrastructure by 2025.4 Beyond roads, bridges and tunnels, tomorrow’s infrastructure will extend to smart buildings, power grids and intelligent water.


Final Frontiers

From the satellites that guide our GPS, to pharma trials in micro-gravity and tourists on Mars, space industry revenues have grown at 7% per year since 2005 and are forecast to account for 5% of US GDP by 2040.5


Clean Power

Significant progress has been made to improve energy efficiency and reduce the costs of the underlying technology involved in generating power from wind, solar, hydroelectric and geothermal sources. Renewable energy is projected to account for 75% of the global power new capacity addition by 2050 —up from 56% at the end of 2018.6


Capitalize on the Opportunity


Portfolio Construction Ideas

Investors looking to incorporate New Economy thinking into their portfolio allocations could consider:


1
Complement an Existing Core or Growth Allocation

Pursue more dynamic growth by focusing on future disruption to potentially control both growth and sector drivers.


2
Amplify Existing Sector Positions

Emphasize an emerging trend within a particular segment of the economy to create a more robust growth profile.


3
Replace a Narrow Thematic Position

Target a broad theme and capture the entire ecosystem fueling innovation.


Pursue the Potential


Technological change knows no bounds. Product innovation shouldn't either.

SPDR® S&P Kensho ETFs

SPDR ETFs has partnered with Kensho Technologies, Inc., a specialist in identifying innovative companies that are positioned for growth, to bring six thematic ETFs to market:


KOMP

SPDR® S&P Kensho New Economies Composite ETF


HAIL

SPDR® S&P Kensho Smart Mobility ETF


FITE

SPDR® S&P Kensho Future Security ETF


SIMS

SPDR® S&P Kensho Intelligent Structures ETF


ROKT

SPDR® S&P Kensho Final Frontiers ETF


CNRG

SPDR® S&P Kensho Clean Power ETF

Footnotes

1 “The Fourth Industrial Revolution: What it means, how to respond,” weforum.org, as of 01/14/2016.

2 Automotive revolution perspective towards 2030, McKinsey & Co. 2016.

3 “Artificial Intelligence Market Forecasts,” Tractica Research, as of 04/30/2019.

4 American Society of Civil Engineers 2017 Infrastructure Report Card.

5 https://www.uschamber.com/series/above-the-fold/the-space-economy-industry-takes.

6Bloomberg New Energy Finance, as of 03/20/2019.

Disclosures

Concentrated investments in a particular sector or industry tend to be more volatile than the overall market and increases risk that events negatively affecting such sectors or industries could reduce returns, potentially causing the value of the Fund’s shares to decrease.

Passively managed funds invest by sampling the Index, holding a range of securities that, in the aggregate, approximates the full Index in terms of key risk factors and other characteristics. This may cause the fund to experience tracking errors relative to performance of the Index.

Select Sector SPDR Funds bear a higher level of risk than more broadly diversified funds. All ETFs are subject to risk, including the possible loss of principal. Sector ETFs products are also subject to sector risk and nondiversification risk, which generally results in greater price fluctuations than the overall market.

KENSHO® is a registered service mark of Kensho Technologies Inc. ("Kensho"), and all Kensho financial indices in the Kensho New Economies' family (the "Kensho Indices") and the Kensho Indices corresponding service marks have been licensed by SSGA Funds Management, Inc. ("SSGA FM") in connection with the SPDR S&P Kensho Intelligent Structures ETF, SPDR S&P Kensho Smart Mobility ETF, SPDR S&P Kensho Future Securities ETF, SPDR S&P Kensho Clean Power ETF, SPDR S&P Kensho Final Frontiers ETF and SPDR S&P Kensho New Economies Composite ETF (collectively, the "SPDR Kensho ETFs"). The SPDR Kensho ETFs are not marketed, sold, or sponsored by Kensho, Kensho's affiliates, or Kensho's third party licensors.

Pursuant to the license agreement entered into by SSGA FM with Kensho, SSGA FM pays a fee to use the Kensho Indices. SSGA FM is sublicensing rights to the Kensho Indices to the SPDR Kensho ETFs at no charge. Kensho is not affiliated with SSGA, SSGA FM or their affiliates.

Kensho is not an investment adviser or broker-dealer and Kensho makes no representation regarding the advisability of investing in any investment fund, other investment vehicle, security or other financial product regardless of whether or not it is based on, derived from, or included as a constituent of any Kensho Indices. Kensho bears no responsibility or liability for any business decision, input, recommendation, or action taken based on Kensho indices or any products based on, derived from, or included as a constituent of any such index. All referenced names and trademarks are the property of their respective owners.

Technology companies, including cyber security companies, can be significantly affected by obsolescence of existing technology, limited product lines, and competition for financial resources, qualified personnel, new market entrants or impairment of patent and intellectual property rights that can adversely affect profit margins.