In January 1993, the SPDR® S&P 500 (NYSE:SPY) , which tracks the returns of the S&P 500 index, became the first exchange-traded fund (ETF) in the US. Now, there are well over 2,650 ETFs in the country with about $6.7 trillion in assets under management.
And that number is expected to grow. According to BlackRock (NYSE:BLK), the largest issuer of ETFs in the United States, assets under management in global ETFs are likely to reach $14 trillion by 2025.
And according to several ETF trends identified in a recent survey byJPMorgan Chase:
“Positions in thematic funds have increased significantly since 2020 and are set to increase further over the next two to three years, as respondents move more assets into the technology and environmental themes in particular.”
Therefore today, we introduce two new thematic ETFs that deserve to be on investors’ radar screen in the months ahead. We should remind readers that both funds are still small and have little trading history.
1. First Trust SkyBridge Crypto Industry and Digital Economy ETF
- Current Price: $26.73
- 52-Week Range: $18.27- $27.56
- Expense Ratio: 0.85% per year
This year has seen a surge in prices of many crypto assets, like Bitcoin (up 131% year-to-date), Ethereum (up 551% YTD), Cardano (up 1,167% YTD) and Solana (up 15,920% YTD). In addition to cryptocurrencies, investors are putting their money in companies that are part of the digital currency revolution. These firms range from Bitcoin miners to financial technology names, crypto asset exchanges, tech names that focus on blockchain technologies or retailers that accept payments in crypto.
Recent metrics suggest the global cryptocurrency market is “projected to grow from $910.3 million in 2021 to $1,902.5 million in 2028 at a CAGR of 11.1% in forecast period, 2021-2028.”
The First Trust SkyBridge Crypto Industry and Digital Economy ETF (NYSE:CRPT) invests in businesses in the crypto space. CRPT, which has 30 holdings, started trading in September.
In terms of the sub-sectoral breakdown, the software sector makes up the largest portion, with 32.69%, followed by the capital markets (24.69%), IT services (15.91%), banks (10.72%) and semiconductors and semiconductor equipment (5.27%). The top 10 holdings account for 57% net assets of $39.7 million.
Crypto miners Marathon Digital (NASDAQ:MARA) and Bitfarms (NASDAQ:BITF), digital asset exchange Coinbase Global (NASDAQ:COIN), analytics software group MicroStrategy Incorporated (NASDAQ:MSTR) and investment management firm Galaxy Digital (OTC:BRPHF) lead the names in the fund.
Since inception, CRPT is up more than 35% and recently hit a record high. Readers who are bullish on cryptocurrencies but do not want to commit capital to digital assets could consider investing in an ETF like CRPT.
2. ProShares Nanotechnology ETF
- Current Price: $43.19
- 52-Week Range: $39.73 - $43.49
- Expense Ratio: 0.58%
From cryptocurrencies, we move on to nanotechnologies, that “involve the creation and/or manipulation of materials at the nanometre scale…. Nanotechnologies offer potentially huge benefits to society, industry, the environment and health…. [P]otential benefits include contributions to improved energy storage and efficiency, better diagnosis and treatment of disease, faster computer systems and remediation of polluted air, soil and water.”
Emergen Research highlights:
“The global nanotechnology market size was US$75.80 billion in 2020 and is expected to reach US$290.93 billion in 2028 and register a revenue CAGR of 18.3% during the forecast period, 2021-2028.”
The ProShares Nanotechnology ETF (NYSE:TINY) gives access to firms that rely on nano-science in different industries, like agriculture, food science, manufacturing, electronics and energy. The fund was listed in late October.
TINY, which tracks the Solactive Nanotechnology Index, currently has 30 holdings. The three sectors in the fund are IT (69.05%), health care (26.75%), followed by materials (4.20%).
The leading 10 stocks comprise around 54% of the fund. Over two-thirds of the firms are based in the US. Next in line are those from Israel (7.05%), Japan (5.07%), the Netherlands (4.99%), Taiwan (4.23%), Singapore (3.55%) and others.
Among the top names on the roster are the biopharma group Moderna (NASDAQ:MRNA), which has developed one of the first vaccines against the novel coronavirus; chip heavyweights Advanced Micro Devices (NASDAQ:AMD) and ASML (NASDAQ:ASML); Agilent Technologies (NYSE:A), whose analytical instruments and software are used in chemical markets and life sciences; and Bruker (NASDAQ:BRKR), which develops scientific instruments.
In the past three weeks, TINY returned close to 8%. Readers who want to include a pure-play nanotechnology ETF in their long-term portfolios should research the fund further.