Thematic ETFs are growing more than twice as fast as the ASX ETF average according to fund manager VanEck.

Thematic ETFs allude to ETFs that focus around a single sector such as renewable energy or esports, as opposed to ETFs that might track an index or currency.

In research provided to Stockhead, VanEck revealed that in the 6 months to 30 April 2021 Funds Under Management (FUM) in thematic ETFs on the ASX grew by over 70 per cent to $4.3 billion and in sustainable ETFs by over 62 per cent to $3.52 billion.

Conversely FUM across ASX ETFs as a whole only grew by 33.4 per cent to $66.1 billion.

VanEck’s Australian chief executive Arian Nerion attributes the growth to the rise in the economic trends of themes certain ETFs cover.

“These [ETFs] offer investment strategies that capitalise on enduring economic trends or themes, with technology, clean energy and healthcare favoured among investors,” he said.

“With ASX-listed thematic ETFs, which are accessible, liquid and low cost, investors can position their portfolios to take advantage of these important economic and secular trends that are shaping the future.”

And Nerion has tipped funds under management will surpass $10 billion by the end of 2021.


Which thematic ETFs on the ASX are doing well?

One thematic ASX ETF singled out was the VanEck Vectors Video Gaming and eSports ETF (ASX:ESPO) which VanEck launched last September.

While the esports sector on the ASX is small, both in the number of companies and market capitalisation, this ETF offers exposure to some of the largest players globally such as Nintendo and Tencent.

Six months on, Nerion said this ETF had been a hit with investors.

“[ESPO] for example, has been our quickest growing ETF since we first launched our funds in Australia in 2014,” he declared.

“ESPO is Australia’s first and only dedicated video gaming and esports ETF and has drawn FUM of around $100 million in just seven months. We expect FUM to grow by the year’s end given the popularity of gaming with retail investors.”

Nerion also said VanEck’s Global Clean Energy ETF (ASX:CLNE) was set to benefit in the coming months in conjunction with clean energy.

“The Paris climate agreement is driving demand for green, renewable energy across the globe,” he said.

“The transition away from scarce fossil fuels is inevitable and a significant trend offering huge investment potential.”

ESPO & CLNE ETF price chart


Healthcare set to grow

And finally, without naming a specific thematic ETF on the ASX, Nerion noted healthcare was a popular option with increased healthcare spending predicted to flow into the industry.

He noted if global GDP grew to US$137 trillion by 2030 as projected, and healthcare expenditures stayed at 10 per cent of GDP, we’d see US$14 trillion in healthcare spending per year for the rest of the decade.

“Even before COVID-19, health spending was rising strongly across nations given ageing demographics and emerging nations’ healthcare systems catching up to developed nations’,” Nerion said.

“Investors are likely to reap the benefits of the healthcare expansion and rising investment.”