Investors are seeing a rise in thematic ETFs amid the coronavirus. Thematic ETFs could become the new sector funds. Yahoo Finance’s Heidi Chung spoke with ETF Trends’ CEO and Director of Research, Dave Nadig, on The Ticker, to discuss why this is taking place.
As thematic ETFs have already become increasingly popular with investors, some have stuck out in particular, given the current state of the country and, more specifically, trends taking place at the market.
Nadig uses U.S. Global Jets ETF (JETS) as an example. It has been around for some time, without receiving much action, only for the airline industry and the associated companies to take a major hit. In return, investors went to JETS, hoping to be able to call a bottom. Since then, for the past three months, JETS has received day after day of inflows. So, for investors who have been interested, it has ballooned into a $2 billion powerhouse fund.
One could contrast this with the Roundhill Sports Betting & iGaming ETF (BETZ), which just launched four days ago, and it came out of the gate with two million shares a day, which is unheard of for a brand-new launch. With that said, it’s already starting to receive inflows, taking in around $60-70 million under management by the end of today. That’s a terrific run for a new idea.
“I think this is investors looking for those ‘work from home’ stocks, but, in this case, maybe it’s more ‘play from home.'” Nadig states. “It’s a way for folks to be out there, engaging with their friends in sports betting, or even just online gambling. So, if it’s not lighting in a bottle, maybe it’s static electricity, and I think this is the kind of thing we’re going to continue to see.”
Switching gears, in regards to investors being unaware of what ETFs may feature as holdings, Chung brings up the SPDR S&P Retail ETF (XRT), where the top holding is actually Stamps.com. So, as far as what investors need to know when looking into ETFs, Nadig makes it clear that people use ETFs the way they use stocks because they are easy to trade. That in mind, it’s essential to personally look under the hood to know what is in there.
“You should never buy an ETF because you heard the ticker. You should buy an ETF because you like what it owns.”
For more market trends, visit ETF Trends.