Founded in 2006, ProShares has been an innovator in the world of ETFs (exchange-traded funds). The company has introduced leveraged and inverse vehicles and focuses on a variety of compelling verticals. In its own way, ProShares has made it possible for anyone to invest like the pros.
In fact, the company recently launched six new ETFs targeting attractive tech themes such as smart factories, big data and nanotechnologies. All of these represent huge market opportunities and are experiencing strong growth.
Here are 6 ProShares ETFs betting on the future of next-gen industries:
- ProShares Nanotechnology ETF (NYSEARCA:TINY)
- ProShares Smart Materials ETF (NYSEARCA:TINT)
- ProShares On-Demand ETF (NYSEARCA:OND)
- ProShares Big Data Refiners ETF (NYSEARCA:DAT)
- ProShares S&P Kensho Cleantech ETF (NYSEARCA:CTEX)
- ProShares S&P Kensho Smart Factories ETF (NYSEARCA:MAKX)
These ETFs are also affordable, with expense ratios totaling just 0.58% of total assets.
ETFS Betting On the Future: ProShares Nanotechnology ETF (TINY)
Nanotechnology is about managing small-scale particles, an emerging field with many practical applications. One example is nanorobots, which can monitor your body’s internals. Note that these nanorobots are roughly one-millionth of the size of a typical ant.
There is enormous market opportunity for nanotechnology. According to Emergen Research, spending in the sector is forecasted to reach $290 billion by 2028, which would translate into an annual growth rate of 18% (from 2021).
The new ProShares Nanotechnology ETF tracks the Solactive Nanotechnology Index, with a portfolio of 30 companies with an average market capitalization of $58 billion.
A top holding for the fund is Advanced Micro Devices (NASDAQ:AMD), among the top semiconductor operators. The company is a leader in developing small-scale chips that power myriad kinds of systems. They have also proven quite effective for cloud computing and artificial intelligence.
Next, there is Moderna (NASDAQ:MRNA), which leveraged its research in mRNA technology to create a breakthrough vaccine for the Covid-19 virus. But Moderna believes that this is just the start. The company has a strong pipeline of vaccines, such as for the flu, Zika virus and even various cancers.
ProShares Smart Materials ETF (TINT)
Smart materials is a specialized category that hasn’t gotten much attention from investors. But given the strong growth in industries like EVs (electric vehicles) and smart homes, the smart materials market is really heating up. Based on research from Brand Essence, the spending is expected to go from $44 billion in 2019 to $110 billion by 2026.
Consider that smart materials aren’t just about better performance, but also for lower energy costs and improving sustainability.
The ProShares Smart Materials ETF launched in October, becoming the first ETF vehicle for investors looking to invest in the smart materials sector. which has 30 companies in the index and the average market capitalization is $14.65 billion. The fund also has a global perspective. Only about 52% of the investments are in the U.S. Some of the other countries where the ETF is focused on include South Korea (17%) and France (12%).
South Korean Hansol Chemical (KRX:014680) is among the top holdings. Founded in 1980, the company is a leader in manufacturing hydrogen peroxide for paper, textiles and semiconductors.
Then there’s Constellium SE (NYSE:CSTM), located in France. The company is a global manufacturer of aluminum rolled products, extruded products and structural parts. A key part of the company’s success has been due to heavy investment in R&D. As a result, CSTM has been able to aggressively expand into categories like pick-up trucks and even space launchers.
ProShares On-Demand ETF (OND)
The ubiquity of the Internet means living in an interconnected world. The emergence of 5G means that interconnection is only getting faster.
The end result? Customers expect real-time experiences. It’s really just about touching a few buttons — and the fewer, the better.
The market for on-demand experiences is massive and growing at a fast clip. In 2020, global spend was $403 billion and is forecast to reach $604 billion by 2023. Some of the key areas include streaming, ecommerce, ride sharing and esports.
The ProShares On-Demand ETF capitalizes on all these trends and more. The fund tracks the FactSet On-Demand Index and includes 34 companies with an average market capitalization of $35.89 billion.
One of the holdings is DoorDash (NYSE:DASH). During the second quarter, the revenues surged by 83% to $1.24 billion. Keep in mind that the company controls roughly half of the market for U.S. food-delivery.
Next, the ETF has a major stake in Netflix (NASDAQ:NFLX). Even though the competition has been getting more intense, the company has continued to thrive and remain the leader in the streaming business. Netflix’s ability to create compelling original content remains top-notch, as seen with the huge success of “Squid Game.” In the first four weeks of the showing, 142 million member households watched it — the biggest debut in company history.
ProShares Big Data Refiners ETF (DAT)
Statista forecasts a global surge in big data, from 64.2 zettabytes in 2020 — a zettabyte is equivalent to one trillion gigabytes — to 180 zettabtyes by 2025.
The research firm upped its targets because of the impact of the COVID-19 pandemic. But of course, there are other long-term drivers for data creation, including smartphone usage, cloud computing and IoT (Internet-of-Things).
Many business leaders certainly understand that data is transformational, particularly when applied to artificial intelligence and machine learning. These approaches have been proven to lower costs, enhance customer experiences, improve supply chains — just to name a few.
But it is often challenging for companies to properly utilize data. There are issues with legacy systems, wrangling the data and hiring data scientists. Note that a report from Gartner reveals that only 53% of AI projects go into production.
Yet this provides an enormous opportunity for software companies. Based on research from IDC, spending on big data and analytics solutions is on track to hit $215.7 billion this year. That growth is also expected to remain robust, with estimated CAGR (Compound Annual Growth Rate) at 12.8% through 2025.
But as with any technology revolution, there will be winners and losers — and if history is any indication, there will be far more losers than winners. That’s why a smart strategy is to invest in a diversified basket of stocks, such as the ProShares Big Data Refiners ETF. Tracking the FactSet Big Data Refiners Index, this fund counts 30 companies in its portfolio. The average market capitalization of holdings is nearly $15 billion.
One of the top holdings is Snowflake (NYSE:SNOW), which operates a cloud-native database platform. The company’s solution charges based on usage, which aligns best with customer business needs and convenience. Plus the Snowflake platform only takes a few minutes to spin up.
In the latest quarter, SNOW’s revenues surged more than 100% on a year-over-year basis and there were over 4,900 customers. Snowflake estimates its market opportunity at a whopping $90 billion.
Or consider MongoDB (NASDAQ:MDB). The company’s database is based on the next-generation NoSQL model, which is quite effective for high-performance mobile apps and websites. In the second quarter of fiscal 2021, subscription revenues jumped by 44%.
Some of other top holdings include Datadog (NASDAQ:DDOG), Dynatrace (NYSE:DT), Splunk (NASDAQ:SPLK) and Palantir Technologies (NYSE:PLTR).
ProShares S&P Kensho Cleantech ETF (CTEX)
Unfortunately, the news just gets more dismal for the global climate. Just look at the latest projections from United Nations Intergovernmental Panel on Climate Change. If major actions are not taken soon, higher temperatures will likely lead to irreversible damage to the climate system, such as with droughts, fires, rising sea levels and more extreme weather events. The U.N. Secretary-General, António Guterres said the report was a “a code red for humanity.”
Yet there is a silver lining — that is, governments and private industry are taking stronger actions to deal with the problems. The result is significant growth for the cleantech sector. In fact, this could represent one of the biggest investment opportunities for the next decade. According to research from Smart Prosperity, spending on environmental solutions is forecasted to reach $2.5 trillion by 2022.
As should be no surprise, there are many areas to invest, such as in solar, wind, battery technology, biofuels, renewable power, water remediation and so on. And yes, it can be tough to identity which solutions are the most promising.
One way for investors to play the cleantech market is the ProShares S&P Kensho Cleantech ETF. CTEX tracks the S&P Kensho Cleantech Index, comprised of companies that span many of the key areas of the cleantech industry.
For example, the fund has an investment in Tesla (NASDAQ:TSLA). The company’s CEO and founder, Elon Musk, is focused on sustainability and finding ways to deal with climate change. A critical part of this is developing electric cars that are better than traditional ones. To pull this off, Musk has invested heavily in developing battery technology. For example Tesla is working on an advanced lithium ion system that can last for the entire lifetime of a car.
Another interesting holding is GE (NYSE:GE). Over the past few years, the company has undergone a turnaround and a big part of the growth strategy is increased investment in renewable energy. Among the many efforts, GE has partnered with New Fortress Energy to convert its Long Ridge Terminal from natural gas to hydrogen.
The ETF’s other holdings include names like First Solar (NASDAQ:FSLR), Enphase Energy (NASDAQ:ENPH), Sunrun (NASDAQ:RUN) and SunPower (NASDAQ:SPWR).
ProShares S&P Kensho Smart Factories ETF (MAKX)
A key reason for global supply-chain problems is the labor shortage. That only increases the urgency for automation, as seen through growing investments in smart factories. According to Global Industry Analysts, spending on smart factories is expected to hit a whopping $214 billion by 2026, up from $140 billion in 2020.
A critical part of this will be the rollout of 5G allowing for better connectivity. But there will also be the benefit of technologies like IIoT or the Industrial Internet of Things.
To get exposure to this growing market, there is the ProShares S&P Kensho Smart Factories ETF, which invests in companies providing automation technologies for manufacturers. Note that one of the portfolio holdings is C3.ai (NYSE:AI), which recently came public. The company’s AI technologies allow for sophisticated analytics and insights across the manufacturer’s value chain, such as with inventory optimization and predictive maintenance. Its technology processes 1.7 billion predictions per day.
Another portfolio holding is HollySys (NASDAQ:HOLI). Founded in 1993, the company is one of the leaders in automation and IT solutions for factory automation. Since inception, it has completed more than 30,000 projects for about 17,000 customers across sectors like high-speed rail, urban rail, power, and petrochemicals.
As for some of the other holdings, they include Rockwell Automation (NYSE:ROK), Autodesk (NASDAQ:ADSK), PTC (NASDAQ:PTC) and Aspen Technology (NASDAQ:AZPN).
On the date of publication, Tom Taulli did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Tom Taulli (@ttaulli) is the author of various books on investing and technology, including Artificial Intelligence Basics.