Investor interest in the exchange-traded thematic funds skyrocketed in the second quarter, according to a report released Monday.
Thematic ETFs are funds that identify “powerful and disruptive macro-level trends and underlying investments that will benefit from the materialization of those trends,” wrote analysts at Global X, a thematic issuer of ETFs.
More specifically, thematic investing involves a strategy focused on long-term growth and is “unrestricted by arbitrary geographic and sectoral definitions.” Global X also notes that this strategy is known for its “related concepts”: the sets of ideas that ETFs have perhaps become best known for, such as the WFH “working from home” fund,
profiled by MarketWatch in June.
ETF-themed assets increased 65% from Q1 to Q2, according to Global X’s analysis, even as the number of funds increased only slightly, to 129 from 125.
Global X classifies thematic ETFs into three categories: disruptive technology, which includes subtopics such as fintech and digital content; people and demographics, covering ideas like millennial millennial shopping patterns,
and the economy of the concert; and physical environment, which encompasses climate change and sustainability issues.
Related:This ETF takes a “conscious capitalism” approach
Assets in the disruptive technology subcategory outshine the other two, and are getting bigger and bigger: They jumped more than 70% from the first quarter to the second, reaching more than $ 31 billion. Some of the giants of the ETF ecosphere are in this category, including the ARK Innovation ETF ARKK,
The flagship fund of the company founded by Cathie Wood.
ETF thematic assets under management, Global X source
The amount of money invested in the demographics and people group increased 87%, but started from a much lower base.
It is important to note that Global X eliminates ETFs that are classified as “ESG” focused, for the environment, society or governance, from its general thematic definition, so the physical environment category does not include such funds .
After the coronavirus crisis, some predictable topics attracted the most investor interest: Cloud Computing and Healthcare Innovation saw the largest relative and absolute increases, Global X wrote.
Related:Investors are making big ‘BETZ’ on this online sports and gaming ETF
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