Higher fees and mistimed investments challenge growth
Investors are leaving exchange-traded funds tied to specific themes, such as artificial intelligence and video gaming, as they flock to funds linked to broad stock-market benchmarks that are hitting record highs.
Returns from broad market indexes are setting a higher bar for thematic funds this year. The S&P 500 .SPX, the benchmark for the U.S. stock market, has climbed over 22% this year, propelled by gains from influential stocks including Nvidia and Meta Platforms. Investors often mistime investing in themes, according to a Morningstar study that found investors in thematic ETFs missed out on two-thirds of their returns in a five-year period.
“We still have longer-term conviction in themes,” said Arelis Agosto, head of thematics at Global X, which has seen outflows in 19 of its 31 thematic funds over the last 12 months. “We take a long-term view.” The number of thematic launches dropped to 13 this year from 39 in 2023, while closures of thematic funds in 2024 have already topped 2023′s total, with 36 compared to 32, according to Morningstar.
Fund Theme Morningstar Etfs Funds Market Firm Ferrari NV CFRA Nvidia
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