Dear First Mates,
I hope you’re doing well. In recent years I’ve become fascinated with thematic exchange-traded funds (ETFs). After launching my first model here at The WealthPlan LLC, I was excited to offer clients a unique way to invest in certain long-term trends or themes.
Today, I wanted to reach out and share an overview of some top thematic ETFs we’ve been using so you understand why I’m optimistic about these investments.
To begin with, what is a thematic ETF?
Think of thematic ETFs as baskets of stocks all linked to a particular theme or trend. They provide targeted exposure to growing industries and technologies and can be a strategic addition to your investment portfolio. Interested in cloud computing, video games, or artificial intelligence? There’s an ETF for that.
That said, here are ten thematic ETFs used in our Thematic ETF model and their potential growth in the years to come.
Our Top Thematic ETFs in 2023
Autonomous technology and robotics: ARK Autonomous Tech. & Robotics ETF
In its simplest terms, the autonomous tech and robotics industry fuels the growth and development of “intelligent” robots able to carry out tasks previously held by humans.
- The market for autonomous technology and robotics is expected to reach $152.9 billion by 2033, with a compound annual growth rate (CAGR) of 19.8%.
- Key players include Northrop Grumman (US), Honda Motor (Japan), and Bluefrog Robotics (France).
Genomics: ARK Genomic Revolution ETF
Don’t remember much from high school biology? Yeah, me neither. Here’s a quick refresher on all things genomics.
- The genomics industry is projected to grow at 19.8% from 2022 to 2032, much faster than its historical growth rate.
- Further, functional genomics, an emerging field within molecular biology, is expected to be the highest revenue-generating segment, with a CAGR of 23% over the next decade.
Consumer lithium batteries: Global X Lithium & Battery Tech ETF
Lithium batteries are key components of electric vehicles (EVs), renewable energy storage, and mobile devices.
- The global Lithium-Ion Battery market was valued at $65.9 billion in 2021 and is projected to reach $273.8 billion by 2030, a CAGR of 19.3%.
- Leading companies include Honda, Hyundai, Samsung, and Hitachi.
3D printing: The 3D Printing ETF
Curious to see the 3D printing market in action? Thanks to 3D printing, Boston Dynamics’ Atlas humanoid robot can leap and somersault. If you haven’t yet, check out the video – it’s well worth 54 seconds of your time.
- The global 3D printing market is valued at $22.40 billion in 2023 and is expected to increase to $105.99 billion by 2030.
Clean energy: iShares Global Clean Energy ETF
Advances in wind and solar technologies and legislation from the Biden administration are fueling rapid growth in the industry.
- Largely motivated by energy security rather than climate change, the clean energy sector could exceed investments of $2 trillion annually by 2030, an increase of 50% compared to 2023.
Electric vehicles (EVs): Global X Autonomous & Electric Vehicles ETF
Similarly, as part of the current administration’s efforts to speed up domestic adoption of EVs, the EV market has seen several catalysts in 2023.
- There’s an initiative to see a national network of 500,000 EV chargers and a push for EV sales to account for half of all new car sales by 2030.
- Furthermore, Goldman Sachs Research predicts EVs will make up about half of new car sales worldwide by 2035, up from 14% in 2022.
Artificial intelligence: Global X Artificial Intelligence & Technology ETF
AI is all over the internet and is the topic everyone’s currently talking about. Leading companies in AI include Tesla, NVIDIA, Microsoft, Taiwan Semiconductor Manufacturing, and META.
- Forecasts suggest the global artificial intelligence market could grow from $515.31 billion in 2023 to $2,025.12 billion by 2030.
Marijuana: Amplify Seymour Cannabis ETF
Regarding medicinal marijuana, over 100 naturally occurring compounds – cannabinoids – are found in the cannabis plant. Currently, three FDA-approved drugs exist that incorporate cannabis compounds; however, research into other uses and applications is rapidly increasing.
- Worldwide consumer spending on legal cannabis was $29 billion in 2021, with an expected CAGR of 15% through 2026.
Video games: Global X Video Games & Esports ETF
Unsurprisingly, the at-home entertainment options gained traction during the pandemic, with many turning to video games and esports for the first time.
- The global video game market was valued at over $195 billion in 2022, with analysts suggesting it could grow nearly three times that to more than $580 billion by 2030.
Internet of Things: Global X Internet of Things ETF
According to Oracle, the Internet of Things (IoT) is the network of “things” embedded with sensors, software, and other technologies that connect and exchange data with other devices and systems over the Internet. Examples include home security systems, activity trackers, augmented reality glasses, and motion detectors. As consumer behaviors shift, the popularity of IoT-enabled devices continues to rise.
- Forecasts suggest that increased adoption could generate $12 billion in economic value by 2030, a nearly eightfold increase from 2020.
If you have questions, would like to talk further, or are ready to implement some of these themes into your portfolio, give me a call or reply to this email. I’m happy to build you a custom lineup of thematic ETFs or implement our model that owns over 15 different themes.
Take care, and, as always, reach out if I can help in any way.
Dave’s Picks
Finance YouTube vid o’ the month!
- Never Pay Your First Medical Bill – Do This Instead… | KOSHER MONEY – This was a fantastic episode discussing the flaws in our medical system and how to overcome outrageous medical bills. A must-listen!
- Frank Sinatra – Gangsta’s Paradise – AI is insane.
- Matisyahu “One Day” Live at SiriusXM – Best Hasidic Jewish Reggae Beatboxing Ever.
- Concentration in the Stock Market by Ben Carlson – This was a great read discussing the pros and cons of concentrating your investments in a small number of individual companies.