Under Surveillance

  • Tweet
  • Share on LinkedIn
  • Share via email
  • Print

Every day in the news we hear about the creation of new products or industries based on innovations in technology, old businesses being disrupted and new ways of doing business. Yet for most of us, investing in such trends, ideas and events is less than straightforward. Exchange traded funds (ETFs) may be a vehicle, which can offer exposure to innovative companies that can potentially impact our world. Here we consider some of the major trends making headlines today and ways ETFs may potentially provide exposure to those sectors

Facial recognition technology is becoming an increasingly controversial tool in the fight against crime. However, it also holds significant positive potential for other business sectors.

Facial recognition is an Artificial Technology (AI)-based technology that recognizes people using a number of our physical features. It is used for a myriad of applications – from security to social media – but most TV viewers would draw an immediate connection to crime fighting. Or unlocking your phone.

With respect to crime-fighting, the surveillance technology is a marked step up from the camera-based security we have relied upon for decades. Today there are more CCTV’s (Closed Circuit television – also known as video surveillance) per person in the US than in any other country.1 By incorporating facial recognition software, it is expected such technology will help identify terrorists or any other known criminals.

However, facial recognition technology for security purposes has in practice, proved somewhat problematic. Pilot tests of facial recognition security systems have so far yielded patchy results and courted controversy. San Francisco legislators recently voted to ban the public use of facial recognition technology. Similar steps have been taken in Oakland and Somerville, Massachusetts amid a wider national debate over online privacy.2. In January 2020 a social media company was ordered to pay compensation to a group of users in Illinois after winning a legal dispute that its facial recognition tool violated the state’s privacy laws.3

Yet, there are other positives for the burgeoning technology. Its application could result in faster processing and automation of identification, lessening reliance on security guards and side stepping hacking vulnerabilities as it offers quick and efficient verification of a person.

Video doorbells, unlocking phones, health applications, ‘smart’ targeted advertising, payment systems, passport control, aid with missing persons (and pets) and helping to identify potential threats are just some of the uses associated with facial recognition.

Which is why there are estimates that by 2024 the global facial recognition market will generate US$9bn of revenue, with a compound annual growth rate (CAGR) of 12.5% for the period 2019-2024.4

Among the beneficiaries of this technology, many believe, will be microchip and software manufacturers as well as data and internet service providers.

1https://martechseries.com/technology/usa-highest-number-cctv-cameras-per-person-world/

2 6 Boston Globe. Somerville City Council passes facial recognition ban. 27 June 2019

3https://www.bbc.co.uk/news/technology-51309186

4https://www.prnewswire.com/news-releases/facial-recognition-market-expected-to-grow-at-a-cagr-of-12-5---exclusive-report-by-mordor-intelligence-300979730.html

Investors should consider the investment objectives, risks, charges and expenses of a fund carefully before investing. To obtain a prospectus, or a summary prospectus, if available, that contains this and other information about a fund, contact your financial advisor or visit im.bnymellon.com. Please read the prospectus carefully before investing.

ETF shares are listed on an exchange, and shares are generally purchased and sold in the secondary market at market price. At times, the market price may be at a premium or discount to the ETF's per share NAV. In addition, ETFs are subject to the risk that an active trading market for an ETF's shares may not develop or be maintained. Buying or selling ETF shares on an exchange may require the payment of brokerage commissions.

ETFs trade like stocks, are subject to investment risk, including possible loss of principal. The risks of investing in the ETF typically reflect the risks associated with the types of instruments in which the ETF invests. Diversification cannot assure a profit or protect against loss.

Bonds are subject to interest rate, credit, liquidity, call and market risks, to varying degrees. Generally, all other factors being equal, bond prices are inversely related to interest-rate changes and rate increases can cause price declines. High yield bonds involve increased credit and liquidity risk than higher rated bonds and are considered speculative in terms of the issuer’s ability to pay interest and repay principal on a timely basis.

Equities are subject to market, market sector, market liquidity, issuer, and investment style risks to varying degrees. Small and midsized company stocks tend to be more volatile and less liquid than larger company stocks as these companies are less established and have more volatile earnings histories.

Investing in foreign denominated and/or domiciled securities involves special risks, including changes in currency exchange rates, political, economic, and social instability, limited company information, differing auditing and legal standards, and less market liquidity. These risks generally are greater with emerging market countries.

Past performance is no guarantee of future results.

This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular investment, strategy, investment manager or account arrangement. Please consult a legal, tax or investment advisor in order to determine whether an investment product or service is appropriate for a particular situation.

Views are current as of the date of this publication and subject to change. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission.

BNY Mellon Investment Management is one of the world’s leading investment management organizations and one of the top U.S. wealth managers, encompassing BNY Mellon’s affiliated investment management firms, wealth management organization and global distribution companies. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation and may also be used as a generic term to reference the Corporation as a whole or its various subsidiaries generally. BNY Mellon ETF Investment Adviser, LLC is the investment adviser and BNY Mellon Securities Corporation is the distributor of the ETF funds, both are subsidiaries of BNY Mellon.

MARK-101111-2020-02-10