Natural Resource ETFs Dominate Global Thematic Flows

The trend ‘Natural Resources’ was favored by investors last week with an inflow of USD458.6 million. This massive inflow was driven by the positive performance of the two themes ‘Agribusiness’ and ‘Natural Resources’. Infrastructure also enticed investors with USD$141.5 million in net inflows and promising performance in the ‘Energy Infrastructure’ theme.

‘Natural Resources’ are a trending theme for investors

‘Natural Resources’ attracted investors last week. The bucket managed to add USD$458.6 million of new assets due to its outperformance compared to the broad-based indexes. For instance, the trend lost only 0.33%, while the S&P 500 and Nasdaq went down 12% and 20%, respectively.

Among the five themes that capture this investment opportunity, ‘Agribusiness’ and ‘Natural Resources’ were the most attractive to investors as they recorded USD$268.2 million and USD$229.8 million inflows, respectively. The two themes were up 15.31% and 16.22% year-to-date, respectively. This can be attributed to the fact that Agribusiness ETFs may hold securities that are well-positioned to benefit from red-hot inflation. Similarly, Natural Resources ETFs provide exposure to tangible assets such as commodities and natural resources equities. These types of investments tend to preserve capital in inflationary environments.    

Conversely, the remaining three themes following this trend didn’t fare well until last week. ‘Timber and Forestry,’ ‘Strategic Metals,’ and ’Water’ were hit by a wave of selling, with outflows totalling USD$40 million. Their year-to-date performance was down -8.63% on average.

ETFs in play:

• Agribusiness ETFs
• Natural Resources ETFs

‘Infrastructure’ is the top-performing trend this year

‘Infrastructure’ was by far the top-performing trend this year. It rose 7.66% since the beginning of the year. In terms of global flows, this trend came second to natural resources. It recorded USD$141.5 million in net inflows last week, most from investments in the ‘Energy Infrastructure’ theme. The latter generated USD$95.5 million in net inflows compared to USD$45.9 million for the ‘Global Infrastructure’ theme – the only other theme capturing the investment opportunity of the ‘Infrastructure’ trend. This is not surprising as energy prices have skyrocketed in the wake of the Russo-Ukrainian war, which leaves a lot of European countries uncertain of their ability to meet demand in the coming years. As a result, Energy Infrastructure ETFs are among the best performing funds for the year (+20.44% year-to-date) amid fears of global energy shortage.

ETFs in play:

• Energy Infrastructure ETFs
• Global Infrastructure ETFs
  

Data for this article is as of April 22nd, 2022.

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