Global X stood out among U.S. ETF providers in 2021 with its asset base more than doubling to $44 billion. The firm ended as the 12th largest ETF manager, climbing four spots in the crowded CFRA league table aided by $21 billion of net ETF inflows. To learn more about what drove the firm’s relative success, we spoke in mid-January to Global X CEO Luis Berruga. He explained that the firm has become known for thematic ETFs, which have a long-term growth focus, are unconstrained by geographies and sectors, and are tied to relatable concepts that impact daily lives.
Global X offers 33 such thematic ETFs with over $20 billion in assets. While Global X expanded its suite in 2021, Berruga noted the Global X Lithium & Battery Tech ETF (LIT) was the industry’s first thematic ETF when it came to market in 2010. LIT recently had $5.3 billion in assets.
Investments tied to electric vehicle demand remain compelling to Global X but are not alone. Berruga explained that many of the supply chain issues seen around the world the last few years has caused many corporations to rethink how they prepare for the future. Companies inside the Global X Robotics and Artificial Intelligence Thematic ETF (BOTZ), such as ABB, Keyence, and NVIDIA (NVDA), are positioned as beneficiaries. Berruga also believes we are witnessing a very clear transition from the physical world to the digital world with more devices connected to the Internet. This introduces more points of vulnerability within a network that can be exploited by bad actors. Companies found in Global X Cybersecurity ETF (BUG) are blocking millions of threats on a daily basis.
Global X also expanded its thematic ETF lineup in 2021. The firm increased its focus on clean energy and sustainable living with new products tied to agtech, clean water, solar, and wind energy. Berruga explained that the Global X team worked on products that invest in companies that are well positioned to capture the long term shifts in the macroeconomy. For example, the Global X Clean Water ETF (AQWA) owns American Water Works (AWK), Ecolab (ECL) and Xylem (XYL), while the Global X Solar ETF (RAYS) holds Enphase Energy (ENPH) and Sunrun (RUN). CFRA is already issuing star ratings on these funds, despite their young age, based in part of our analysis of the holdings.
Established thematic ETFs such as BOTZ and BUG as well as new products like RAYS are competing for investor attention with Robo-Stox Global Robotics & Automation Index ETF (ROBO), First Trust Nasdaq Cybersecurity ETF (CIBR), Invesco Solar ETF (TAN) and others. But unlike broad market ETFs where there can be limited differences between what is inside one fund or another and fees can matter more, with thematic ETFs the holdings drive performance, making it important to look under the hood.
Conclusion
You can hear the full interview with Berruga, which also covers a discussion of the firm’s income suite of products and how Global X has expanded its presence internationally, at MarketScope Advisor or on YouTube.