Close Menu
Fund Focus News
    Facebook X (Twitter) Instagram
    Trending
    • How to understand a property’s real value
    • Two New ETFs Let You Trade Like A Washington Insider – Forbes Advisor
    • Active management questioned as report reveals few funds outperformed passive options
    • Mayor Eric Adams once again denied public funds for NYC re-election bid while Mamdani, Sliwa granted millions
    • OPEC Turns The Output Tap On: What It Means For Oil ETFs – United States Brent Oil Fund, LP ETV (ARCA:BNO), SPDR S&P Global Natural Resources ETF (ARCA:GNR)
    • Mutual fund industry sees 7 times growth in 10 years; passive investing gains momentum: Motilal Oswal
    • How Ethereum Treasury Companies Beat Out ETFs: Standard Chartered
    • Active ETFs Are Booming in Europe. US Managers Want In
    Facebook X (Twitter) Instagram
    Fund Focus News
    • Home
    • Bonds
    • ETFs
    • Funds
    • Investments
    • Mutual Funds
    • Property Investments
    • SIP
    Fund Focus News
    Home»ETFs»Analysis:Investors flee thematic ETFs as stock benchmarks soar
    ETFs

    Analysis:Investors flee thematic ETFs as stock benchmarks soar

    October 22, 2024


    Investors are leaving exchange-traded funds tied to specific themes, such as artificial intelligence and video gaming, as they flock to funds linked to broad stock-market benchmarks that are hitting record highs.

    The run for the exits, however, may slow if the broader market stumbles.

    While flows in equity ETFs overall continue to climb, thematic ETFs, which invest in companies tied to everything from solar energy to robotics and millennial consumers, are on pace for their third-consecutive year of net outflows, according to financial data and analysis company Morningstar. 

    The category, which has total assets of $108 billion, has lost $5.8 billion in investor capital this year, greater outflows than the $4.8 billion for all of 2023, according to Morningstar.

    “It’s winter for thematic ETFs right now,” said Taylor Krystkowiak, investment strategist at Themes ETFs, an asset-management firm focused on this category.

    Returns from broad market indexes are setting a higher bar for thematic funds this year. The S&P 500, the benchmark for the U.S. stock market, has climbed over 22 per cent this year, propelled by gains from influential stocks including Nvidia and Meta Platforms.

    The five-largest ETFs tracking the S&P 500 and the Nasdaq 100, another equity benchmark, have seen inflows of $170 billion this year. The SPDR S&P 500 ETF Trust on Thursday became the first ETF to reach $600 billion in assets.

    “It’s not that people don’t like the idea of themes any longer, but that a bull market dominated by a handful of megacaps makes it hard for any theme to stand out,” said Aniket Ullal, ETF analyst at CFRA, a market-research firm.

    BAD TIMING

    Part of the challenge, said Bryan Armour, ETF analyst at Morningstar, is the nature of thematic investing itself. 

    Investors often mistime investing in themes, according to a Morningstar study that found investors in thematic ETFs missed out on two-thirds of their returns in a five-year period.

    “You have to pick the right theme, then be sure that the fund has picked the stocks that will benefit most from that theme, and then be right about the timing of when you buy the fund,” Armour said. “Getting that trifecta right is tough.”

    Even some AI-themed ETFs with outsized exposure to market-darling Nvidia have struggled to retain assets. The Global X Robotics & Artificial Intelligence ETF has seen net outflows of $89 million in the last 12 months, according to the firm. Despite the fund having nearly 13 per cent of its portfolio in the AI chipmaker – almost double the S&P 500 weighting – it has performed only in line with the index, with both up about 39 per cent in the past year.

    “We still have longer-term conviction in themes,” said Arelis Agosto, head of thematics at Global X, which has seen outflows in 19 of its 31 thematic funds over the last 12 months. “We take a long-term view.” 

    Cathie Wood’s ARK Innovation ETF, which invests in companies promising “disruptive innovation,” has seen $2.6 billion in outflows in 2024, the most of the thematic ETFs, according to Morningstar. The fund is down more than 9 per cent this year.

    The fact that thematic funds tend to levy higher fees can diminish their appeal. Thematic ETFs’ fees average 0.62 per cent of money invested while the average ETF fee is 0.49 per cent. Investors pay 0.09 per cent to own the State Street S&P 500 ETF and 0.03 per cent for BlackRock’s iShares Core S&P 500 ETF, according to Morningstar.

    The number of thematic launches dropped to 13 this year from 39 in 2023, while closures of thematic funds in 2024 have already topped 2023’s total, with 36 compared to 32, according to Morningstar.  

    Themes ETFs is bucking that trend, having launched 18 products since December, including a Transatlantic Defense ETF, which invests in defense companies based in NATO member states, and a European Luxury ETF, with holdings in Ferrari NV and Watches of Switzerland Group PLC. 

    “I think that when S&P 500 megacaps stop delivering the way they do today, the focus will shift back to thematic ETFs,” Krystkowiak said.



    Source link

    Share. Facebook Twitter Pinterest LinkedIn Tumblr Telegram Email

    Related Posts

    Two New ETFs Let You Trade Like A Washington Insider – Forbes Advisor

    August 6, 2025

    OPEC Turns The Output Tap On: What It Means For Oil ETFs – United States Brent Oil Fund, LP ETV (ARCA:BNO), SPDR S&P Global Natural Resources ETF (ARCA:GNR)

    August 6, 2025

    How Ethereum Treasury Companies Beat Out ETFs: Standard Chartered

    August 6, 2025
    Leave A Reply Cancel Reply

    Top Posts

    How to understand a property’s real value

    August 6, 2025

    Qu’est-ce qu’un green bond ?

    December 7, 2017

    les cat’ bonds deviennent incontournables

    September 5, 2018

    ETF : définition et intérêt des trackers

    May 15, 2019
    Don't Miss
    Property Investments

    How to understand a property’s real value

    August 6, 2025

    Understanding value is at the core of smart property investment, from finance to planning, to…

    Two New ETFs Let You Trade Like A Washington Insider – Forbes Advisor

    August 6, 2025

    Active management questioned as report reveals few funds outperformed passive options

    August 6, 2025

    Mayor Eric Adams once again denied public funds for NYC re-election bid while Mamdani, Sliwa granted millions

    August 6, 2025
    Stay In Touch
    • Facebook
    • Twitter
    • Pinterest
    • Instagram
    • YouTube
    • Vimeo
    EDITOR'S PICK

    Funds for water system improvements coming | News

    August 6, 2024

    Pharma, healthcare & banking sectors to do well for investors, says Rahul Singh of Tata Mutual Fund

    October 16, 2024

    Final Tender Offer Results in respect

    October 23, 2024
    Our Picks

    How to understand a property’s real value

    August 6, 2025

    Two New ETFs Let You Trade Like A Washington Insider – Forbes Advisor

    August 6, 2025

    Active management questioned as report reveals few funds outperformed passive options

    August 6, 2025
    Most Popular

    ₹10,000 monthly SIP in this debt mutual fund has grown to over ₹70 lakh in 23 years

    June 13, 2025

    ₹1 lakh investment in these 2 ELSS mutual funds at launch would have grown to over ₹5 lakh. Check details

    April 25, 2025

    ZIG, BUZZ, NANC, and KRUZ

    October 11, 2024
    © 2025 Fund Focus News
    • Get In Touch
    • Privacy Policy
    • Terms and Conditions

    Type above and press Enter to search. Press Esc to cancel.