Investors struggling to decide which hot trends they should join from electric vehicles to robotics will soon have another option: Bet on them all.
There’s one exchange-traded fund in the works that plans to track stocks most widely held by products from every corner of Wall Street’s $180 billion boom in niche strategies.
The Amplify Thematic All-Stars ETF will pick up companies favored by funds targeting technology, health care, sustainability and more, according to a filing to the Securities and Exchange Commission. The product will be passively managed.
“There is so much dispersion and companies across thematic ETFs that this basically tries to cut through these and say ‘OK, where is the point where all these different ideas meet? I’m going to own that,’” said Athanasios Psarofagis, ETF analyst for Bloomberg Intelligence.
Along with tech and health care, the fund’s index will feature popular holdings of ETFs involved in consumer trends as well as innovation in transportation, aerospace and mining industries.
The fund’s filing doesn’t list holdings yet, but the stocks tracked by Cathie Wood’s US$24.4 billion ARK Innovation ETF (ARKK) could potentially be included, according to BI. Unlike ARKK, though, no single company may represent more than five per cent of the Amplify index.
An existing fund employing a related strategy is the Main Thematic Innovation ETF, or TMAT, an actively managed product that includes other thematic funds. The Invesco Solar ETF is its top holding at 14.2 per cent, and two Ark Investment Management products -- the ARK Genomic Revolution ETF and ARK Fintech Innovation ETF -- each comprise more than nine per cent.
Thematic ETFs have exploded in popularity within the past year as retail investors entered the market in droves, eager to bet on unique niches. The funds attracted a record US$42 billion in 2020 and have already taken in more than US$31 billion this year.