Thematic exchange-traded funds (ETF) are the most popular products offered to investors looking to adopt a thematic approach to their portfolios. Here is a short guide to these instruments and how they work, as well as a look at some of the most popular ETFs currently on the market.
How a Thematic ETF Works
They are financial instruments that enable investors to invest in a basket of assets that are all exposed to a specific theme. These assets are associated with a wide variety of sectors, all of which have been identified by fund managers as being relevant to the specific theme. Thus, for example, an investor, instead of buying stock in a long list of companies each predicted to grow due to its exposure to the theme, can simply invest in a single ETF that encompasses all of those companies and more.
7 Popular Thematic ETFs
There are many different ETFs on the market, with most investment institutions offering their own particular packages. The seven listed here are the most popular across the global markets today.
First Trust Cloud Computing ETF (SKYY)
This fund is linked to an equity index called the ISE CTA Cloud Computing Index. It seeks out investment results that correspond generally to the price and yield of this index. As the name suggests, the index is connected to tech themes and includes companies such as Google, Microsoft and Hewlett Packard.
ARK Innovation ETF (ARKK)
ARKK seeks long-term capital growth by investing in the securities of companies linked to the theme of ‘disruptive innovation.’ Companies included in ARKK are those that rely on or benefit from innovation in fields such as DNA technologies, automation and robotics, and AI.
Global X Robotics & Artificial Intelligence ETF (BOTZ)
BOTZ is built on a theme similar to that of ARKK, but is more focused, zeroing in on companies that rely on or stand to benefit from developments in robotics, automation and AI.
First Trust NASDAQ Cybersecurity ETF (CIBR)
CIBR tracks companies that are involved specifically in the cybersecurity sub-sector of tech and industry. Selected companies must be classified as cybersecurity companies by the Consumer Technology Association and have a minimum market cap of US$250 million.
iShares Global Clean Energy ETF (ICLN)
ICLN is focused on the clean energy sector, an area in which considerable growth is foreseen in both the near and distant future as almost all economic sectors seek to make use of cleaner, more efficient energy sources. Featured sectors include solar and wind energy
ARK Genomic Revolution ETF (ARKG)
Companies within ARKG are expected to see substantial long-term growth through their involvement in the enhancement of human life by incorporating technological and scientific developments and advancements in genomics into their business. Targeted areas include stem cell research, bioinformatics, molecular diagnostics and agricultural biology.
Amplify Transformational Data Sharing ETF (BLOK)
BLOK is directed at capitalizing on future developments in the still new and volatile blockchain and cryptocurrency sector.
Nour Private Wealth (NPW) is a Canadian company with a team of wealth advisors servicing clients across seven provinces. For more information on thematic investment, thematic ETFs and other forms of wealth creation and preservation, contact us today and speak to one of our wealth advisors.