With the recent performance of equity markets amidst a rising interest rate environment, investors have begun to question whether thematic ETFs still have a place in portfolios. There is often an association made between thematics, such as robotics, automation and AI, with technology and growth stocks but this can be a flawed assumption.
Technology stocks have been a big driver of the recent performance of global equity indices, after five years we may now be seeing this trend start to taper. Divergence since the start of 2022 has resulted in the worst underperformance for growth at the start of a year since 1995.
Whilst some investors may believe this rotation is long term and long overdue, the need for diversification has never been more important. In fact, this rotation could be positive for cyclical companies, many of which are featured in ROBO and have been shunned in recent years. The ETFS ROBO Global Robotics and Automation ETF aims to provide a high-quality bias and significant diversification across growth and cyclical areas, such as factory automation. ROBO is not a concentrated bet on a handful of high-flying tech stocks but a selection of best in class robotics, automation and AI stocks from around the world, including industrials, warehouse and logistics automation and healthcare. As a result, when many high valuation tech stocks are off 30-50% from their all-time highs, ROBO is only off ~5%.
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ETFSTrade idea: ETF Volatility - Truths and Misconceptions
In this week’s ETFS Trade idea, we look at the misconceptions around ETFs causing volatility and explain why these are myths.
High level observations:
ETFs have been unfairly targeted as the cause of market volatility
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ETFSTrade idea – Conflicting signals in the U.S. - Time for caution?
ETFS S&P 500 High Yield Low Volatility ETF (ZYUS)
ETFS Physical U.S. Dollar ETF (ZUSD)
The U.S. economy continues to surprise to the upside with
markets rebounding strongly.
Yet rising inflation, subdued long-term rates and geo-political
risks remain a concern.
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