Thematic ETFs fell down to earth — is it time to look again?

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After enjoying strong yields and flows earlier in the plague, themed ETFs were forcibly dropped to the ground. Demand for such products has weakened, with € 0.6 billion (0.5 billion pounds) of themed ETF flows across Europe in the first quarter of 2022, the first quarter since 2019 in which they attracted less than € 1 billion.

This reflects terrible performance: to quote some of the most severe injuries, e VanEck Crypto and Blockchain Innovators Ucits ETF Recorded a brutal paper loss of 74 percent in the first half of 2022, while ETC Group Digital Assets and Blockchain Equity UCITS ETF Fell 67.7 percent over the same period. As our chart below shows, a significant number of other funds have suffered losses of at least 30 percent during this time – out of a sample of about 50 themed ETFs, only five have completed this six-month period in black.

These extreme examples reveal some of the major risks of thematic ETFs. They can have significant exposure to growth stocks, technology and the U.S. market more broadly, and also tend to focus on overly excessive areas. This leads to the following concerns: that they expose investors to a trend or sector just when demand and valuations peak, that portfolio building techniques may leave them too focused or focused only in a way tangent to a particular issue, and that they require a high level of due diligence. This is why subjects again received a Limited show Recently A list of the top 50 ETFs in the investor chronicle.

But if studies have pointed to their failures, we do appreciate that such products can fill gaps in portfolios and are increasingly important to some investors. We also note that some issues may have longevity to reward investors in the longer term, even if the ups and downs can be severe. So even though not many topics got on our latest list, we followed the convention by describing the currently exciting options to our panel of experts.

This article was previously published by Investors ChronicleDegree owned by the FT Group.

God iShares Automation & Robotics ETF (RBTX) Has dropped by almost 30 percent over a six-month period and is a good example of a sale that is crumbling the subject area. But while it is unsurprisingly exposed to the problems facing growth investors and American technology, the fund continues to focus on a notable issue. The price is reasonable for a themed product at 0.4%, it has billions of assets and is diversified across about 160 holdings, none of which accounted for more than 1.3% of the assets at the end of June. About half of the portfolio was in U.S. stocks, with a 15% allotment to Japan.

As in other sectors, funds such as these can overlap with global and more mainstream US funds, as well as technology funds. L & G’s competitor for this fund, in part because of the regular due diligence that the supplier itself performs on its holdings in its themed ETFs.

God iShares Aging Population Ucits ETF (Ages), Despite considerable losses, was hit far less severely by these issues with more technological focus. Importantly, it focuses on a trend that should significantly impact companies over time, and yield returns for investors in the right areas.

Investment issues like these can be open to interpretation, meaning funds may differ from the buyer’s expectations in terms of what they hold. This may be an example: the fund, which recently had nearly 400 holdings, had a significant allocation of health services as some might expect, and accounted for about half of its assets. But other sector allocations may come as a surprise, especially the 36.4% fund weighting for finance. In terms of geography, it is fairly weighted to the U.S., which accounted for 52.3% of assets.

To address the fund’s role, it seeks to own companies that “provide products or services specific to the aging world population,” ranging from pharmaceutical companies to insurers and consumer discretionary businesses. This is a relatively broad interpretation of the issue, but it does dilute any sector-specific risk. This is another large fund and comes with a price tag of 0.4 percent.

God iShares Global Clean Energy Ucits ETF (INRG) Is the poster-child of the world of themed ETFs. We decided to stay with this fund last year after liquid issuances led to a change in its underlying index. As we are Ten, Large changes in the fund that included a significant increase in the target number of holdings make it liquid and more diversified. It remains a controversial but popular foundation with a long-term appealing theme.

It is worth noting that the fund operates in a relatively dense space: there are a handful of clean energy ETFs, as well as more focused plays like hydrogen economy ETFs. There are also active options, which present a plethora of options for investors interested in the subject.

One separate complaint about this fund relates to price: a 0.65 percent commission feels pretty steep for such a large ETF, even if it is an expert product.

Finally, e iShares Digitization Ucits ETF (DGIT), With its focus on digitally focused services in emerging and emerging markets, still looks to us like a foundation with a resilient theme. The fund recently had 218 holdings and investments in all sorts of companies, from package delivery names to cyber security businesses, payment processing giants and most of Fang shares. But unsurprisingly it has a bias towards both the tech sector and the US.

We continue to love the issue behind this fund, as well as its size and commission of 0.4 percent. But as with other technology-minded issues, consider the risk of doubling the same holdings if you also use global, American or technology funds.

* Investors Chronicle is a 160-year-old publication owned by the Financial Times that offers an expert and independent view of the investment market. It provides educational features, investment commentary, practical tips and personal financial coverage. For more information, visit

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