Thematic and diversified investment via ETFs
Summary: ETFs offer an way to get exposure to a trading theme, geographical region or other submarkets through a single instrument. Below we demonstrate a fraction of the possibilities to focus or diversify your portfolio with ETFs.
ETFs are typically covering either specific asset classes, geographical regions, or investment themes, and the latter has really gained interest during the past years. As mentioned in this article, this typically comes at a low cost, compared to the cost of acquiring each of the instruments in the ETF individually.
Multiple providers are offering ETFs, such as Amundi, Ossiam, Invesco, iShares, Xtrackers, HSBC, Lyxor and WisdomTree. Below is an example of 10 thematic ETFs and 10 ETFs with different geographical exposure (some of them with specific focus on ESG). They have been selected only for illustrative purposes due to their different themes and should not be considered as any trade considerations. Only UCITS ETFs are shown, as these typically have a KIID document, meaning that they do not have the same trade restrictions as some of the larger US ETFs which cannot be traded in some jurisdictions, unless you have status as being a professional trader.
Examples of thematic ETFs with a variety of trading themes:
- INFR:xmil - iShares Global Infrastructure UCITS ETF
- INRG:xlon - iShares Global Clean Energy UCITS ETF
- WCBR:xmil - WisdomTree Cybersecurity UCITS ETF
- FSKY:xlon - First Trust Cloud Computing UCITS ETF
- FOOD:xmil - Rize Sustainable Future of Food UCITS ETF
- HEAL:xlon - iShares Healthcare Innovation UCITS ETF
- RBOT:xlon - iShares Automation & Robotics UCITS ETF
- TRVL:xmil - Lyxor STOXX Europe 600 Travel & Leisure UCITS ETF
- ESP0:xetr - Vaneck Vectors Video Gaming & eSports UCITS ETF
- LERN:xmil - Rize Education Tech & Digital Learning UCITS ETF
Examples of ETFs with different geographical exposure:
- XZW0:xetr - Xtrackers MSCI World ESG UCITS ETF
- XZEU:xetr - Xtrackers MSCI Europe ESG UCITS ETF
- SGAS:xetr - iShares MSCI USA ESG Screened UCITS ETF
- SGAJ:xetr - iShares MSCI Japan ESG Screened UCITS ETF
- ICHN:xams - iShares MSCI China UCITS ETF
- RUS:xpar - Lyxor MSCI Russia UCITS ETF
- AEEM:xpar - Amundi MSCI Emerging Markets UCITS ETF
- INR:xpar - Lyxor MSCI India UCITS ETF
- IRSA:xlon - iShares MSCI South Africa UCITS ETF
- IBC6:xetr - iShares MSCI Australia UCITS ETF
What to look out for when trading thematic ETFs?
Note that new ETFs in some time after their launch may have relatively low liquidity compared to established ETFs, so keep an eye out when trading those with a relatively large bid-ask spread. Read more on ETF liquidity here.
Some of the thematic ETFs are created with companies which are mostly is pure-plays within the theme, i.e. where a large parts of the company’s revenue is exposed to the theme. Other ETFs include companies if only a minor part of their revenue is associated with the ETF theme, e.g. for typical cloud computing ETFs which contain companies like Amazon, Alphabet etc. So the price movements in the ETF may be affected significantly by events which are not related to the overall ETF theme.
Quarterly Outlook Q2 2022
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.