With the environment changing, companies are positioning themselves to take full advantage of society's behavioral changes.
Cathie Wood, a fund manager with an eye on the future of technology, has started looking for companies performing well and making their way into the innovation and tech field.
ARK Invest’s Cathie Wood?
The founder of ARK Invest, an equity FinTech investment fund that provides exposure to digital wallets, mobile payments, lending, risk transformation, artificial intelligence, and e-commerce innovations through five of its ETFs.
ARK has over the years outperformed the market, growing to be amongst big players, while Cathie Wood grows into being compared to investors like Warren Buffet.
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ARK Fintech Innovation ETF (ARKF)
Looking into ARK Fintech Innovation, an ETF focused on new Fintech innovations. Has this year "literally" become a "discovery" year for the ARK Fintech Innovation ETF?
Valued at $2.72 billion, during the first quarter of 2021 Calender Year (CY21), ARK FinTech Innovation ETF started its "Discovery" journey, acquiring 311 846 shares in Discovery Limited, followed by more transactions during the year.
Besides the fact that Discovery is known for its health insurance, it has started making moves in the financial sector. ARK fintech held over 4.8 million shares in Discovery as of writing.
Discovery Limited (DSY)
Fiscal Year 2020
Demonstrating constant growth during the past four years between 2016 to 2020; Discovery's annualised premium income (API) core businesses increased by R2.7 billion to R9.6 billion during the period, together with its gross inflows under management increasing to R79.6 billion.
Vitality and Banking business reported strong growth during the pandemic, followed by the group's Emerging businesses reporting exponential growth of 81% during the 2020 fiscal year.
"Discovery delivered a robust operating performance while maintaining prudent COVID-19 provisions. The business model has proven to be highly relevant and is well positioned to grow on the back of trends emerging from the pandemic" The company commented in its results for December 2020.
After being launched in 2019, Discovery bank reached over 287 000 clients and 540 000 accounts, with weekly growth during the period.
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Fiscal Year 2021
Discovery's profits were recorded at R3.2 billion during is FY21, 30 June 2021 results, representing a 1730% increase, with operations delivering normalized earnings of R6.4 billion, a 7% increase.
Headline earnings per share increased to 454.7 cents, representing a 910% increase from the FY20, with earnings per share rising by 3 148% to 480 cents per share.
The Discovery board decided not to pay dividends for FY21 despite the company posting excellent returns. The CEO further adding that Discovery hasn't a big dividend payer and preferred to reinvest profits in growth.
Discovery bank, a segment in Discovery Limited, is challenging and changing the status quo of how people normally bank.
"World’s first behavioral bank"
"We operate in a landscape that now, more than ever, demands innovation and digitisation, but also purpose and being an active partner in the lives of modern consumers," Hylton Kallner, Discovery bank CEO, explains.
Despite the loss in revenue, expanding on average of 500 daily new bank sales, Discovery Bank gained traction, reaching 362 000 with 649 00 accounts
The banks' retail deposits increased by 167% from the previous period to R8.18 billion, with a steady improvement in its mixed products; transactional accounts and credit cards represent over 80% of the new business.
Discovery bank recently launched payment platforms like Apple Pay and Discovery Pay.
Entering into the financial sector with innovation, Discovery introduced features such as virtual cards to its clients. On the other hand, Vitality expands globally, partnering with Zwift, a fitness and social change platform that previously focused on games.
Discovery rewards its clients for responsible driving, spending, and staying healthy through Discovery Miles; a rewards currency initiative from Discovery bank and Vitality.
The group has grown to a global scale, and as part of the strategy to continue creating value and transforming the health and financial Discovery, aims to execute the following:
- South Africa: To be the perfect composite model, number 1 in every industry, and the Bank pivoting to growth as the composite-maker within SA.
- United Kingdom: To have best-in-breed products across businesses and operating as a fully integrated composite business with a seamless One Vitality client journey and to have a successful entry into motor insurance.
- Ping An Health Insurance: To be the leading health insurer in China with over 50 million clients.
- Vitality Group: To be the world's largest and most sophisticated behavioral platform linked to financial services.
This is according to the company’s financial results for its fiscal year FY21 ending on 30 June 2021. After Chinese regulations clamp down on tech companies, Discovery's share price dropped by 8%
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Chinese Clampdown on tech companies continues to influence investors' sentiments on tech companies. With the decisions by the government having financial implications for the companies; To meet the Chinese regulatory requirements, Discovery has indicated that it may need to raise more capital for its investment in China, Ping An, which may require up to R1.5 billion.
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Sources – EasyResearch, JSE Sens, Discovery Limited, Business Tech, 24/7 Wall st,
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