How Themes ETFs Stands Out in Crowded Market | ETF Trends

There are more than 200 ETF providers in the $8 trillion U.S. ETF market, but I’m intrigued by a recent entrant’s ambitions. In December 2023, Themes ETFs introduced 11 ETFs. Then in January 2024, the firm filed for 18 additional ETFs. VettaFi joined the team last week to celebrate at the Nasdaq. 

Themes ETFs is led by Jose Carlos Gonzalez, co-founder and former director of Global X and current CEO and co-founder of Leverage Shares, a European ETF firm. Other Themes ETFs leaders previously worked at Cboe Vest and ProShares. 

The current roster of Themes ETFs provides exposure to some popular disruptive technology thematic strategies such as the Themes Generative Artificial intelligence ETF (WISE) and the Themes Cybersecurity ETF (SPAM). However, others are more industry focused such as the Themes Airlines ETF (AIRL) and the Themes Global Systemically Important Banks ETF (GSIB). The final group are more fundamentally constructed high-quality ETFs such as the Themes Natural Monopoly ETF (CZAR). CZAR owns companies with high sales, stable profitability, and reinvestment of profits. 

A Focus on Cost 

Besides involving some memorable tickers, the commonality for these ETFs is their low cost. With a 0.35% expense ratio, the above ETFs are less expensive than similarly focused products from more established providers like First Trust, Global X, iShares, State Street Global Advisors, and U.S. Global. 

“All else equal, funds with higher fees pose a greater drag on portfolio performance,” Taylor Krystkowiak, investment strategist at Themes ETFs stated. “We have made it our mission to provide investors with relatively more cost-efficient access to potential market opportunities via our ETFs.” 

Investors Should Dive Deeper 

However, what’s inside the funds are also different than even similarly priced peers. For example, GSIB is different than leading bank ETFs. The SPDR S&P Bank ETF (KBE) holds 91 U.S. banks on an equally weighted basis. More than 60% of KBE’s $1.6 billion of assets is in regional banks, many with high exposure to commercial real estate.  

In contrast, GSIB owns 28 publicly traded global banks that have been identified as systemically important by the Financial Stability Board. These include Bank of China and Barclays, not just Citigroup and JPMorgan. Despite identical fees, GISB’s performance was flat year to ate through February 21, outperforming the 4.5% loss for KBE. 

“We think the strong regulatory requirements provide a high-quality standard,” explained Krystkowiak. 

What’s Next for Themes ETFs 

In addition to raising awareness about its current lineup, the team also plans to expand. Last month, Themes ETFs also filed regulatory documents seeking approval to launch 18 options-based ETFs. We expect these products could come to market in the second half of 2024.  

The list includes put/write options strategies based on individual companies such as Apple and Amazon, as well  as sophisticated ones tied to the S&P 500, the Nasdaq 100, and the Russell 2000 indexes. While no fees have been disclosed, we expect Themes ETFs to continue its aggressive approach. It will be entering a relatively crowded but growing options-based ETF market. 

We think there is room for a recent entrant to have success in the ETF market. However, education about what makes their offerings stand out will be paramount. 

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