10 most popular Thematic ETFs in 2021

Thematic investments have allowed investors to dream and put their money to work in long-term opportunities that may not come to fruition anytime soon. Attracting $100 billion in inflows this year, Thematic ETFs became the new "black hole" in the ETF universe and will continue to lure in a larger and more global investor audience. In this article, we'll recap the 10 most popular Thematic ETFs in the Americas and Europe in 2021 based on year-to-date net inflows.

America's 10 most popular Thematic ETFs

The following list includes America's ETFs that attracted the most net inflows in 2021:

1. KraneShares CSI China Internet ETF (KWEB) - $7.93 billion
2. ARK Innovation ETF (ARKK) - $4.71 billion
3. Global X U.S. Infrastructure Development ETF (PAVE) - $3.98 billion
4. iShares Global Clean Energy ETF (ICLN) - $2.93 billion
5. Global X Lithium & Battery ETF (LIT) - $2.62 billion
6. FlexShares Morningstar Global Upstream Natural Resources Index Fund (GUNR) - $2.16 billion
7. First Trust NASDAQ Cybersecurity ETF (CIBR) - $1.83 billion
8. ProShares Bitcoin Strategy ETF - $1.67 billion
9. AdvisorShares Pure US Cannabis ETF (MSOS) - $1.47 billion
10. BlackRock U.S. Carbon Transition Readiness ETF (LCTU) - $1.44 billion

Here's a brief recap of America's podium (top 3):

# 1 - KraneShares CSI China Internet ETF - KWEB

If I had to rename the KraneShares CSI China Internet ETF (KWEB), I would probably go with the China Crackdown ETF, an appropriate rebrand following an extensive Chinese Government regulatory intervention in multiple high growth Chinese industries. Despite a -46% flop this year, investors remained confident that things can’t get any worse for Chinese tech stocks, pouring close to $8 billion in KWEB this year. KWEB tracks the CSI Overseas China Internet Index, providing exposure to China-based companies focused on internet and internet-related technology. As of December 12, 2021, KWEB's top holdings include Tencent Holdings, Alibaba Group Holdings, Meituan, JD.com, and Baidu, the main victims of this year's crackdown.

# 2 – ARK Innovation ETF - ARKK

ARK Innovation ETF (ARKK) is probably one of the most famous or most mentioned active ETFs this year. Run by Cathie Wood, the fund has witnessed great marketing success and attracted $4.71 billion of inflows in 2021. However, the fund's underlying holdings failed to live up to expectations, sinking the ARKK by -25% (S&P 500 +23%). The fund invests in ‘‘disruptive companies’’ set to innovate in the field of DNA technologies, Genomic Revolution, Automation, Robotics, Energy Storage, Artificial Intelligence, Next Generation Internet, and Fintech.

# 3 - Global X U.S. Infrastructure Development ETF - PAVE

To restart the slumping U.S. economy, President Joe Biden and the U.S. Congress passed a $1.2 trillion bipartisan Infrastructure bill meant to rebuild the nation's crumbling infrastructure and create employment after a pandemic-riddled 2020. The passage of the bill would mean that billions of dollars will be invested in roads, bridges, water systems, transit, and broadband in the next coming years. To reap the benefits, investors injected $3.98 billion this year in the Global X U.S. Infrastructure Development ETF (PAVE). PAVE will provide exposure to companies that stand to benefit from an increase in infrastructure activity in the United States, including those involved in the production of raw materials, heavy equipment, engineering, and construction. Performance-wise, the fund delivered +34% year-to-date.

Europe's 10 most popular Thematic ETFs

The following list is Europe's ETFs that attracted the most net inflows in 2021.

1. iShares Global Clean Energy UCITS ETF (INRG) - $2.05 billion
2. Lyxor Net Zero 2050 S&P Eurozone Climate PAB (DR) UCITS ETF (ZPAB) - $1.16 billion
3. KraneShares CSI China Internet UCITS ETF (KWBE) - $826 million
4. iShares Global Water UCITS ETF (IH20) - $649.2 million
5. iShares Ageing Population UCITS ETF (AGED) - $642.3 million
6. L&G Hydrogen Economy UCITS ETF (HTWO) - $635.1 million
7. Xtrackers Artificial Intelligence & Big Data UCITS ETF (XAIX) - $585.6 million
8. UBS ETF – Sustainable Development Bank Bonds UCITS ETF (MDBUA) - $557.6 million
9. L&G Cyber Security UCITS ETF (ISPY) - $540.3 million
10. SPDR Morningstar Multi-Asset Global Infrastructure UCITS ETF (ZPRID) - $501.8 million

Here's a brief recap of Europe's podium (top 3):

# 1 - iShares Global Clean Energy UCITS ETF - INRG

After delivering stellar gains in 2020, Clean Energy ETFs investors took their profits in early 2021, sending the ETFs into a spiral. Inflows, however, continued to pour in as the long-term investment thesis looked stronger following a price spike in dwindling supplies of natural gas. The energy crisis in the old continent made European leaders scramble for oil and coal to keep up with energy demands. The iShares Global Clean Energy UCITS ETF (INRG) managed to attract $2.05 billion in net inflows this year, despite the 7% performance dip. The fund invests in companies involved in clean energy producers and providers of clean energy equipment & technology from both developed and emerging markets. The push for renewables was on the main menu of the United Nations Annual Climate Change Summit (COP26). The 12-day global meetup highlighted the importance of clean energy investments on the road to net-zero 2050, a catalyst for more Clean Energy ETF inflows in the coming years.

# 2 - Lyxor Net Zero 2050 S&P Eurozone Climate PAB (DR) UCITS ETF

Introduced in 2020, the Paris-Aligned Benchmark (PAB) is one of two increasingly adopted EU Climate Benchmarks in ESG investment strategies. Index providers are realizing the importance of aligning their indices' constituents with initiatives that support the fight against climate change. The Lyxor Net Zero 2050 S&P Eurozone Climate PAB (DR) UCITS ETF was one of many ESG ETFs incorporating the PAB benchmark. It provides exposure to large and mid-cap companies, selected and weighted to be collectively compatible with a 1.5°C global warming climate scenario at the index level. In 2021, the fund attracted $1.16 billion in net inflows and generated a positive +21% return.

# 3 - KraneShares CSI China Internet UCITS ETF – KWBE

KWBE is KWEB's European cousin, with a UCITS wrapper to cater to European investors. Despite the similar downhill performance this year (-41%), KWBE managed to lure in $826 million in net inflows, a showcase of global appetite for Chinese tech stock bargain hunting.

What’s next for Thematic ETFs?

To witness the rollercoaster ride of all the ETFs in the world during 2021, stay tuned in early 2022 for an animated recap.

Explore the Thematic Investing universe with our one-of-a-kind Thematic Investing Hub.

Keep reading:

• TradeTalk – 2021 Wrap Up: A Review of The Year and ETF Predictions for 2022
• Greenhouse gas emission scopes explained
• UN Global Compact: What is it?

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