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“Investors have always
factored in the long term
when building portfolios,
but what is new is the ETF
providing an access point
for this kind of long-term
theme”
Thematic offerings are becoming
common among tracker funds.
The Global X Millennials Thematic
ETF, for example, aims to invest
in firms likely to benefit from the
rising spending power of those born
between 1980 and 2000. Top holdings
include Twitter, Nike and Netflix.
At the other end of the spectrum,
the iShares Ageing Population ETF
tracks companies that generate their
revenue from people aged 60 and
over; its top holdings include online
travel company Webjet and hospice
group Encompass Health. Lyxor also
offers a Gender Equality ETF, which,
as its name suggests, focuses on firms
that score highly for gender equality.
Buy low, sell high
One of the more unusual offerings
is the Marijuana Life Sciences ETF.
The Canada-listed vehicle tracks the
North American Marijuana index,
which follows businesses focused on
so-called cannabis stocks – primarily
FE TRUSTNET
[ ETFs ]
14 / 15
BEST- AND WORST-PERFORMING ETFS OVER 10YRS
ETF 1yr (%)
3yr (%)
5yr (%)
10yr (%)
Lyxor UCITS ETF Nasdaq-100 Daily Leverage 60.93 254.16 515.18 2251.54
ProShares Ultra QQQ [2x Nasdaq-100 daily] 60.97 259.44 529.92 2021.41
ProShares Ultra Consumer Services 66.75 165.77 339.87 1635.45
ProShares UltraShort Real Estate -6.91 -38.64 -60.61 -99.09
ProShares UltraShort Semiconductor -38.11 -83.37 -92.34 -99.54
ETFS 2x Daily Long Natural Gas -29.09 -78.49 -94.4 -99.99
Source: FE Analytics
healthcare and pharma businesses.
Driving this trend is the fact cannabis
has been legalised for medical use in
29 US states and for recreational use in
eight. Legal cannabis sales in the US
are expected to surpass £18bn by 2021.
The ETF has returned 162 per cent over
the past year.
BlackRock’s ETF business, iShares, has
launched a range of thematic trackers to
tap the “megatrends” driving economic,
technological and demographic change.
Its Healthcare Innovation ETF, for
example, tracks companies developing
new healthcare technologies, while the
Digital Security ETF looks for businesses
that protect individuals and companies
from online attacks.
Rob Powell, lead strategist at iShares,
says: “Thematic investing is not a
new phenomenon. Investors have
always factored in the long-term when
building portfolios, but what is new is
the ETF providing an access point for
this kind of long-term theme.”
Other ETFs offer exposure to a
specific region. The iShares MSCI
Korea ETF, for example, follows more
than 100 stocks listed in Korea; it has
returned 75.14 per cent over three years
but is down 1.5 per cent over one.
However, while a portfolio
containing more than 100 companies
may sound well diversified, it’s an
example of how checking under the
bonnet of an ETF is just as important
as for any other investment: Samsung
Electronics accounts for 26.2 per cent
of the fund’s assets.
“Absolutely pointless”
Peter Sleep, senior investment
manager at 7IM, is concerned that
the rise of niche ETFs could spur
investors to follow short-term fads
and trends, rather than investing for
the long term. “There are lots of these
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