3 most popular ETF themes this year

The Thematic ETF universe continues to expand with roughly $7.5 billion of new net inflows this year, despite a notable exposure to growth companies and a kickstarted monetary tightening policies in various corners of the world. Last year, Thematic ETFs netted $100 billion in inflows and have grown to become one of the go-to investment vehicles to gain exposure to themes, trends and megatrends shaping our future. Thematic ETFs are a solution of choice for thematic investing. In a single transaction, investors can capture the investment opportunity of one or more themes that may have long-term capital appreciation prospects.

The 3 most popular ETF themes this year

Disruptive technologies, Digital Infrastructure & Connectivity, Natural Resources, and China Disruptive Technology are among the most popular themes this year, drawing $1.56, $1.24, and $1.21 billion respectively. The first theme made it to the top on investors' dip-buying after technology shares slumped on the prospects of multiple rate hikes.

Natural resources have been among the performing themes this year as inflation, global supply chain disruption and the recent Russia-Ukraine war. The war lifted the prices of various edible (e.g., agriculture) and non-edible commodities (e.g., metals) – and consequently the profitability prospects of their producers.

On the other hand, the China Disruptive Technology theme has been a target for many bargain hunters as the underlying holdings witnessed a long-lasting and gut-wrenching performance triggered by China's crackdown on various industries.

American investors: How to join the top 3 themes bandwagon

ARK Innovation ETF (ARKK), iShares Exponential Technologies ETF (XT), and SPDR S&P Kensho New Economies Composite ETF (KOMP) are the largest ETFs in the disruptive technology theme. Cathie Wood's ARKK has been the most popular – receiving a staggering $1.49 billion out of the total net inflows added to the theme.

For the natural resources theme investors, SPDR S&P Global Natural Resources ETF (GNR, $478 million), FlexShares Morningstar Global Upstream Natural Resources Index Fund (GUNR, $430 million), and iShares North American Natural Resources ETF (IGE, $300 million) are among the most popular in 2022.  For instance, GNR seeks to track the S&P Global Natural Resources Index and invest in companies involved in natural resources and commodities businesses such as agriculture, energy and metals and mining.

Finally, the China Disruptive technology theme can be accessible through KraneShares CICC China 5G & Semiconductor Index ETF (KFVG), KraneShares SSE STAR Market 50 Index ETF (KSTR), and KraneShares Hang Seng TECH Index ETF (KTEC). While they are part of a popular theme, the trio witnessed a combined net outflow of -$19 million.

European investors: How to join the top 3 themes bandwagon

iShares Digitalisation UCITS ETF (DGTL), Lyxor MSCI Disruptive Technology ESG Filtered (DR) UCITS ETF (UNIC), and Lyxor MSCI Digital Economy ESG Filtered (DR) UCITS ETF (EBUY) were three of the most demanded ETFs in the disruptive technology and digital infrastructure themes this year – luring $14, $18, and $11 million respectively.  

There are no thematic European natural resource ETFs available in Europe. Investors can explore similar yet more specific trends such as Timber and Forestry through iShares Global Timber & Forestry UCITS ETF (WOOD), Agribusiness through VanEck Vectors Agribusiness ETF (MOO) or iShares Agribusiness UCITS ETF (SPAG), Water through Global X Clean Water UCITS ETF (AQWA) or L&G Clean Water UCITS ETF (XLMC), or Strategic metals through VanEck Vectors Rare Earth and Strategic Metals UCITS ETF (REMX).

To access the China Disruptive technology theme, European investors can explore HSBC Hang Seng TECH UCITS ETF (HSTE), Invesco MSCI China Technology All Shares Stock Connect UCITS ETF (MCTS), and UBS ETF Solactive China Technology UCITS ETF (UIC2) – some of the largest available funds within in theme pool.

FIND AND COMPARE OVER 8,000 ETFS WITH OUR FREE TOOLS:  

• ETF Screener
• ESG Investing
• Thematic Investing
• Fixed Income Investing

INTERESTED IN SEEING LISTS OF TOP-PERFORMING ETFS? CHECK OUT OUR NEW INVESTING GUIDES:

• Investing in Gold ETFs
• Investing in Silver ETFs
• Investing in Commodity ETFs
• Investing in Oil ETFs
• Investing in ESG ETFs