Saxo Group
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:
Examples of ETFs with different geographical exposure:
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.
The end of the road
Emboldened by surging crude oil prices, Saudi Arabia makes waves on the international stage, as Crown Prince Mohammed bin Salman manages to create a World Champions League, after buying the UEFA Champion League franchise.
As the world embraces GLP-1 obesity wonder drugs, the people next in line to get a prescription stop caring about dieting and exercising, figuring that the drug will later solve all of their weight-related health problems.
With the US budget deficit spiraling above 10% of the GDP, the government is desperate to foster demand for US Treasuries. Under intense pressure from the White House, Congress makes income from government bonds tax-free.
After a criminal group deploys the most deceptive AI deepfake ever seen, generative AI becomes a national security threat. With public distrust soaring, governments crack down with harsh new laws, puncturing the AI hype.
To fix the divergence in the global trade and financial system, the largest deficit countries unite to negotiate new world trade terms. For surplus countries, the reset of the global economic model is a painful adjustment.
As discontent with Biden and Trump rises to fever pitch, Robert F. Kennedy Jr sees his support rising inexorably in the polls. On November 5, Kennedy wins the US presidential election, ushering in a new era in US politics.
Stepping up Japan's economic transformation in 2024, PM Kishida brings in a host of populist policies to boost domestic demand. As the GDP growth rate hits 7%, the BoJ is forced to abandons its yield curve control policy.
As people wake up to how little tax Europe’s billionaires are actually paying, the EU Commission implements a wealth tax of 2%. The tax sends shockwaves through Europe's luxury industry, with luxury giant LVMH plunging 40%.
