Invest in Ideas: 3 Must-Buy Thematic ETFs for Today’s Trendspotters


  • Here are three thematic ETFs to buy to ride some secular trends.
  • Global X Robotics & Artificial Intelligence ETF (BOTZ): It’s hard to think of a more significant trend than AI right now. 
  • VanEck Gaming ETF (BJK): Sports betting is so big ESPN had to get in on the action. 
  • Roundhill S&P Global Luxury ETF (LUXX): The number of affluent worldwide continues to rise. That’s good for the luxury game. 
thematic ETFs - Invest in Ideas: 3 Must-Buy Thematic ETFs for Today’s Trendspotters

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Global X published a whitepaper in August about thematic investing. Specifically, the whitepaper found that traditional sector indexes have generally failed to provide exposure to the new consumer, people with far different attitudes than baby boomers. As a result, thematic ETFs have become popular with investors, especially younger ones. 

Regarding current themes investors are exploring, artificial intelligence (AI) certainly gets the most media attention. However, new consumer segments, such as sports betting, have captured the attention of younger investors as well. 

Global X indicates that the global online gambling industry is expected to grow significantly. In 2022, The global sports betting market was valued at $83.6 billion. By 2030, it’s expected to grow to $180 billion with a compound annual growth rate of 10.3%. 

To capture some of this growth, you can invest in a broad-market index to gain exposure to gambling businesses such as DraftKings (NASDAQ:DKNG). Or you can build a core portfolio of broad-market ETFs and tactically invest in specific thematic ETFs. If that’s you, here are three thematic ETFs to buy with long growth runways. 

Global X Robotics & Artificial Intelligence ETF (BOTZ)

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The Global X Robotics & Artificial Intelligence ETF (NASDAQ:BOTZ) has grown to $2.2 billion in net assets over its seven-year history. The fund tracks the performance of the Indxx Global Robotics & Artificial Intelligence Thematic Index. Companies that generate a significant portion of their revenues from robotics and AI are eligible for inclusion in the index. 

Other criteria for inclusion include a minimum market cap of $300 million, listed in a developed market such as the U.S. or Germany, generating an average daily volume of $2 million or more, and a free float of at least 10%.

Nvidia (NASDAQ:NVDA) is the largest of 43 holdings with a 14.72% weighting. Nvidia is a big reason BOTZ is up more than 26% year-to-date. I’m also quite fond of its second and third-largest holdings: Intuitive Surgical (NASDAQ:ISRG) and ABB (OTCMKTS:ABBNY), with weightings of 9.69% and 8.28%, respectively. 

The top three industries by weight are industrial machinery (24.1%), semiconductors (14.7%), and medical specialties (13.6%). The weighted average market cap is $176.2 billion. 

BOTZ is the one if you’re looking for a thematic ETF dominated by large-cap stocks.

VanEck Gaming ETF (BJK)

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VanEck Gaming ETF (NASDAQ:BJK) was the first U.S.-listed ETF to focus on the global gaming industry. Launched in January 2008, it tracks the performance of the MVIS Global Gaming Index. To be eligible for inclusion in the index, a company must generate at least 50% of its revenue from gambling.

Unfortunately, gambling ETFs have yet to gain traction with investors, but with sports betting coming on, that may change. 

In addition to generating more than 50% of their revenue from gambling, the companies in the index have market capitalizations of $150 million or greater, a three-month average daily volume of over $1 million, and a minimum monthly trading volume of 250,000 shares in each of the past six months. 

A nice positive: BJK’s one-year return of 19.8% is nearly double that of the S&P 500

The ETF has 42 holdings, with the top five accounting for 34% of the fund’s $60 million net assets. It’s been a while since the ETF’s had a breakout quarter. Its best three-month period since inception was 34.9% in Q2 2009.

Of the top five, I like VICI Properties (NYSE:VICI) because it’s more a real estate play than a bet on gambling.

Roundhill S&P Global Luxury ETF (LUXX)

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On Aug. 23, Roundhill launched the Roundhill S&P Global Luxury ETF (NYSEARCA:LUXX), an ETF that tracks the performance of the S&P Global Luxury Index, a collection of 80 leading global luxury companies from Asia, Europe, and North America.  

“Luxury goods have shown resilience through challenging economic conditions, and we believe the sector has long-term growth potential,” said Dave Mazza, Chief Strategy Officer at Roundhill Investments. “We are excited to offer investors efficient, low cost access to gain access to the global luxury sector with the launch of LUXX.”

As Roundhill stated in its press release, the global luxury market is expected to grow between 2022 and 2030 by 50% to $600 billion annually. 

This isn’t the first time a luxury-themed fund has hit the markets. In August 2007, Claymore Securities (now part of BlackRock) launched the Claymore/Robb Report Global Luxury Index ETF, which tracked the index of the same name. It closed in2010 

However, as more billionaires and near-billionaires have been minted in the past decade, the luxury market has become more of a thing. The top 15 holdings are a who’s who of luxury. My favorite luxury stock, LVMH (OTCMKTS:LVMUY), is the second-largest holding, weighted at 7.9%.

LUXX has 79 holdings and charges a reasonable 0.45%. It will be interesting to see if it can gain traction with investors. 

On the date of publication, Will Ashworth 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 Publishing Guidelines.

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