Balchunas stated that the portfolios are changing – and the flows reflect this. With around 80% of a portfolio that’s usually in dirt cheap beta, investors want the opposite in the other 20% and are drawn to themed “shiny properties”, with ARK Invest being a hot name right now, for example. But this barbell approach consists of more committed investors than many think, Balchunas said.
“There is a lot of thought that the ‘shiny properties’ investors seek performance, and there are probably some of them, but they don’t turn out the way people think and that’s because they have that 80%; It’s not their core retirement money. For example, they run when a traditional mutual fund is sold out.
“It’s an interesting new development here. Topics, while seeming silly, are really just a nice, neat, and accessible way to repackage things like growth, momentum, and even value. They are also repackaging the sectors so that there is a lot of opportunistic innovation in the thematic category. People laughed about it, but it’s strong. “
Compared to the US, Canada’s themed area is relatively small, with around 40 different offerings and an AUM of less than $ 5 billion. However, as Hawkins pointed out, total inflows rose more than 400% over the past year. Agreeing that you no longer see people launching growth or value style ETFs, Hawkins said that there is so much innovation happening with index providers that product producers can slice and dice the underlying securities and stocks.
Horizons ETFs have shape for innovation, launching the world’s first marijuana ETF and this year the first psychedelics ETF while cryptocurrency continues to be a major frontier.