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Thematic Investing on the Rise: ARK ETFs Leading the Pack
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Thematic investing, which has grown massively last year and continued to keep its strong pace this year, has become the most popular niche strategy. This is especially true, as the pandemic has changed the consumer and business landscape, leading to new trends and new ways of investment.
Notably, thematic ETFs do not invest in an entire market or single sector but rather in concepts, themes or trends. Investors are pouring a lot of money into these ETFs focused on themes like cloud computing, e-commerce, disruptive growth, work from home, video gaming, esports, marijuana, alternative energy or 3D printing (read: Investing with Thematic ETFs in 2021).
According to the latest ETFGI data, thematic funds saw net inflows of $42.6 billion in the first two months of this year, more than three times the $13.3 billion garnered in the same period last year. Ark Investment Management founder Cathie Wood’ funds led the broader stampede into thematic investing. In comparison, smart beta ETFs, which invest according to factors such as value and momentum, attracted only $29 billion, actively managed ETFs garnered $34 billion and ETFs that invest according to environmental, social and governance (ESG) principles raised $41 billion during the same period.
At the end of February, there were 662 thematic ETFs and ETPs listed globally, with 1,258 listings, assets of $394 billion, from 183 providers listed on 48 exchanges in 40 countries. Last month, 53 new thematic ETFs/ETPs were launched and the top 20 ETFs/ETPs have collectively gathered $13.15 billion. Still, thematic products comprise tiny part of the $8 trillion ETF/ETP industry.
Below, we have highlighted five ETFs that have attracted investors’ interest so far this year and have been the hottest in this category, per etf.com:
This ETF is the biggest winner in thematic ETF space, gathering about $7.1 billion so far this year. It is an actively managed fund seeking long-term capital appreciation by investing in companies that benefit from the development of new products or services, technological improvements and advancements in scientific research related to the areas of DNA technologies (Genomic Revolution), industrial innovation in energy, automation and manufacturing (Industrial Innovation), increased use of shared technology, infrastructure and services (Next Generation Internet), and technologies that make financial services more efficient (Fintech Innovation). In total, the fund holds 56 securities in its basket and charges 75 basis points (bps) in annual fees. The product has AUM of $24 billion and trades in volume of $12 million shares a day on average (read: Are You a Fan of Ark ETFs' Cathie Wood? Follow This Portfolio).
This is an actively managed ETF pulling in about $3 billion in capital. It is focused on companies that are likely to benefit from extending and enhancing the quality of human and other life by incorporating technological and scientific developments, and advancements in genomics into their business. With AUM of $10 billion, the fund holds 56 stocks in its basket and has 0.75% in expense ratio. It trades in an average daily volume of 6.1 million shares.
This ETF saw inflows of $2.3 billion so far this year. It invests in a company having the theme of Fintech innovation. The Adviser defines Fintech innovation as the introduction of a technologically enabled new product or service that potentially changes the way the financial sector works, which ARK believes includes transaction innovations, blockchain technology, risk transformation, frictionless funding platforms, customer facing platforms and new intermediaries. The fund charges 75 bps in annual fees and trades in average daily volume of 3.8 million shares. It is home to 46 securities and has managed assets worth $4.2 billion (read: Ark Invest ETFs Power Active Investing Growth).
This fund has gathered $2.1 billion in capital, bringing its total AUM to $7.4 billion. ARKW focuses on companies that are expected to benefit from the shift in technology infrastructure to cloud, enabling mobile, new and local services such as companies that rely on or benefit from the increased use of shared technology, infrastructure and services, Internet-based products and services, new payment methods, big data, the Internet of Things (IoT), and social distribution and media. The ETF holds 54 stocks in its basket and charges 79 bps in fees per year. It trades in volume of 2.2 million shares a day on average.
This ETF has accumulated $1.7 billion so far this year. It focuses on companies that are expected to substantially benefit from the development of new products or services, technological improvements and advancements in scientific research related to, among other things, energy, automation and manufacturing, materials, and transportation. These companies may develop, produce, or enable autonomous transportation, robotics and automation, 3D printing, energy storage and space exploration. Holding 46 stocks in its basket, the product trades in average daily volume of 1.9 million shares and charges 75 bps in annual fees.
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Thematic Investing on the Rise: ARK ETFs Leading the Pack
Thematic investing, which has grown massively last year and continued to keep its strong pace this year, has become the most popular niche strategy. This is especially true, as the pandemic has changed the consumer and business landscape, leading to new trends and new ways of investment.
Notably, thematic ETFs do not invest in an entire market or single sector but rather in concepts, themes or trends. Investors are pouring a lot of money into these ETFs focused on themes like cloud computing, e-commerce, disruptive growth, work from home, video gaming, esports, marijuana, alternative energy or 3D printing (read: Investing with Thematic ETFs in 2021).
According to the latest ETFGI data, thematic funds saw net inflows of $42.6 billion in the first two months of this year, more than three times the $13.3 billion garnered in the same period last year. Ark Investment Management founder Cathie Wood’ funds led the broader stampede into thematic investing. In comparison, smart beta ETFs, which invest according to factors such as value and momentum, attracted only $29 billion, actively managed ETFs garnered $34 billion and ETFs that invest according to environmental, social and governance (ESG) principles raised $41 billion during the same period.
At the end of February, there were 662 thematic ETFs and ETPs listed globally, with 1,258 listings, assets of $394 billion, from 183 providers listed on 48 exchanges in 40 countries. Last month, 53 new thematic ETFs/ETPs were launched and the top 20 ETFs/ETPs have collectively gathered $13.15 billion. Still, thematic products comprise tiny part of the $8 trillion ETF/ETP industry.
Below, we have highlighted five ETFs that have attracted investors’ interest so far this year and have been the hottest in this category, per etf.com:
ARK Innovation ETF (ARKK - Free Report)
This ETF is the biggest winner in thematic ETF space, gathering about $7.1 billion so far this year. It is an actively managed fund seeking long-term capital appreciation by investing in companies that benefit from the development of new products or services, technological improvements and advancements in scientific research related to the areas of DNA technologies (Genomic Revolution), industrial innovation in energy, automation and manufacturing (Industrial Innovation), increased use of shared technology, infrastructure and services (Next Generation Internet), and technologies that make financial services more efficient (Fintech Innovation). In total, the fund holds 56 securities in its basket and charges 75 basis points (bps) in annual fees. The product has AUM of $24 billion and trades in volume of $12 million shares a day on average (read: Are You a Fan of Ark ETFs' Cathie Wood? Follow This Portfolio).
ARK Genomic Revolution Multi-Sector ETF (ARKG - Free Report)
This is an actively managed ETF pulling in about $3 billion in capital. It is focused on companies that are likely to benefit from extending and enhancing the quality of human and other life by incorporating technological and scientific developments, and advancements in genomics into their business. With AUM of $10 billion, the fund holds 56 stocks in its basket and has 0.75% in expense ratio. It trades in an average daily volume of 6.1 million shares.
ARK Fintech Innovation ETF (ARKF - Free Report)
This ETF saw inflows of $2.3 billion so far this year. It invests in a company having the theme of Fintech innovation. The Adviser defines Fintech innovation as the introduction of a technologically enabled new product or service that potentially changes the way the financial sector works, which ARK believes includes transaction innovations, blockchain technology, risk transformation, frictionless funding platforms, customer facing platforms and new intermediaries. The fund charges 75 bps in annual fees and trades in average daily volume of 3.8 million shares. It is home to 46 securities and has managed assets worth $4.2 billion (read: Ark Invest ETFs Power Active Investing Growth).
ARK Next Generation Internet ETF (ARKW - Free Report)
This fund has gathered $2.1 billion in capital, bringing its total AUM to $7.4 billion. ARKW focuses on companies that are expected to benefit from the shift in technology infrastructure to cloud, enabling mobile, new and local services such as companies that rely on or benefit from the increased use of shared technology, infrastructure and services, Internet-based products and services, new payment methods, big data, the Internet of Things (IoT), and social distribution and media. The ETF holds 54 stocks in its basket and charges 79 bps in fees per year. It trades in volume of 2.2 million shares a day on average.
ARK Autonomous Technology & Robotics ETF (ARKQ - Free Report)
This ETF has accumulated $1.7 billion so far this year. It focuses on companies that are expected to substantially benefit from the development of new products or services, technological improvements and advancements in scientific research related to, among other things, energy, automation and manufacturing, materials, and transportation. These companies may develop, produce, or enable autonomous transportation, robotics and automation, 3D printing, energy storage and space exploration. Holding 46 stocks in its basket, the product trades in average daily volume of 1.9 million shares and charges 75 bps in annual fees.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>