Disruptive technology exchange-traded funds (ETFs), particularly those with “big data” and “connectivity” mega themes, proved to be the most popular among thematic ETF investors in the aftermath of Covid-19.
According to data from Global X, “disruptive technology ETFs” increased by 62% to a total of US$68.9 billion from US$42.58 billion from the third quarter to the fourth quarter of 2020. This is the most likely period when the impact of the pandemic has been manifested in the investment preferences of ETF investors.
“Big data” and “connectivity” became the favourite mega themes for investors in thematic ETFs as companies in almost all types of businesses were forced to switch to work-from-home mode to minimize Covid-19 infections. This situation still exists up to the present.
In contrast, other thematic ETFs posted much lower assets under management (AUM) during the same period. Although “people and demographics” ETFs more than doubled, growing by 116% during the period to a total of US$16.02 billion, they only represented 25% of the total AUM for “disruptive technology” ETFs.
“Physical environment” ETFs also more than doubled, growing by 121% to US$19.18 billion, during the period but still lagged far behind “disruptive technology” ETFs.
“Big data” ETFs with US$14.96 billion inflows and “connectivity” ETFs with US$14.16 billion also accounted for the biggest share of “disruptive technology” ETFs during the period.
Other “disruptive technology” ETFs include “robotics” ETFs with US$6.38 billion, “fintech” ETFs with US$4.68 billion, “digital content” ETFs with US$1.82 billion, and “mobility” ETFs with US$2.62 billion.
On a year-over-year basis, thematic ETF AUM increased 274% from US$27.8 billion at the end of Q4 2019. There are now 148 thematic ETFs, up from 135 at the end of last quarter, with 18 launches and five closures, according to Global X.
As of the end of Q4 2020, thematic ETFs’ AUM made up 1.9% of the US ETF industry’s US$5.5 trillion total AUM. This is up from 1.2% AUM share at the end of Q3 2020, continuing the segment’s rapid growth when compared to the US ETF industry as a whole.
Digging in, aggregate thematic ETF AUM reached US$104.1 billion at the end of Q4, up 78% from US$58.6 billion achieved at the end of Q3 and exceeding the broader US ETF industry’s 17% quarter-on-quarter gain.
Positive net inflows contributed to US$26.1 billion of the US$45.5 billion thematic ETF AUM gain in Q4, with the remainder coming from market activity.