Three matters that would drive ETF progress in 2021

Thematic investments could leave room for expansion.

After a year underscored by massive growth in thematic ETFs, this corner of the industry appears to be able to keep up in 2021 as investors look for tighter ways to play certain trends, two ETF analysts told CNBC’s “ETF” this week Edge “.

One of the standout examples for 2020 was the Renaissance Capital IPO ETF (IPO), which is up over 111% since the start of the year, Old Mission’s Harry Whitton said in an interview on Wednesday.

“The fund has grown to over half a billion dollars this year. It’s really exciting,” said Whitton, director of ETF sales for his firm. “I think everyone is tied to the entire record of going public this year – over 400 new issues were launched in the IPO space in December.”

Renaissance Capital expects heavy hitters like SpaceX and Instacart to make their debut next year, and that adds up to the gains of the IPO ETF.

Another family of funds likely to build on 2020 success is Ark Invest, which has grossed over $ 15 billion in net worth since the start of the year, Whitton said.

Ark operates seven US-based ETFs on topics such as robotics and the genomic revolution. The largest fund by wealth is the Ark Disruptive Innovation ETF (ARKK), which is up nearly 148% this year.

“You were a pretty small issuer and now you have become a major player in that area,” said Whitton. “They have funds that are up 140, 150, 160% and they are not leverage products. This is where you usually see those returns. It was just a fantastic story and it will likely go on just because they are really innovative at what you do. “

Whitton also kept an eye on trading activity in emerging market ETFs, noting that WisdomTree Emerging Markets ex-state enterprise fund (XSOE) “rose from 20 million shares outstanding to 80 million shares and did really, really well.”

Video game ETFs are also on track for another successful year, said Todd Rosenbluth, senior director of ETF and mutual fund research at CFRA, in the same “ETF Edge” interview.

“These video games-focused ETFs generated net inflows of approximately $ 1 billion in 2020,” said Rosenbluth, referring to games such as the Global X Video Games & Esports ETF (HERO), Roundhill Bitkraft Esports & Digital Entertainment ETF (NERD). and the Wedbush ETFMG Video Game Tech ETF (GAMR).

“These are global ETFs. So while you have exposure to Electronic Arts and Activision Blizzard, about 25% of HERO … is in the US. You are exposure to Nintendo,” he said.

VanEck Vectors Video Gaming and eSports ETF (ESPO), the largest gaming ETF by assets, has China-based Tencent as its largest holding, Rosenbluth added.

“You really have a global game for these ETFs,” he said. “We believe this trend will continue through 2021, regardless of whether more people return home. They have made themselves comfortable playing video games and they likely will in the future.”

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