Thematic exchange-traded funds (ETFs) in Australia have seen flows of around $600 million in 2024, with more than 40 products now available for local investors to choose from.

Global X investment strategist Mark Jocum noted that this year’s recovery has revealed clear winners and losers, with select technology sectors riding the wave of the 2024 megatrend.

“This year has really been all about technology in terms of themes and mega trends, especially around broad technology,” he told InvestorDaily.

"We've seen a lot of interest in semiconductors, and that we're one of the main beneficiaries of the AI ​​revolution we're witnessing right now."

AI technology vendors, especially semiconductor companies, emerged as early winners in 2024, benefiting from strong AI demand. According to Global X, the global semiconductor industry is expected to reach about US$1.2 trillion by 2030.

"There's also a lot of interest in cybersecurity, broader robotics and artificial intelligence," Jocum said.

Robotics and artificial intelligence ETFs more than doubled in 2023, according to previous data from Global X. Meanwhile, domestic investors had already poured $30 million into cybersecurity ETFs by March this year, a stark contrast to net flows of $270,000 recorded for all of 2023.

Although some megatrends have already benefited from impressive inflows in 2024, Jockum noted that there are still sectors that have time to pick up steam.

"One area that could be quite interesting is US infrastructure," he said.

“It's an area that's pretty big in the US, given the whole improvement process that they have to do for some of the local infrastructure there.

"It's definitely an area where I see potential upside and some strong growth given the fiscal support we've seen from some of the U.S. government as well."

Global X, which launched the US Infrastructure Development ETF (PAVE) on the ASX in June, explained that recent legislative moves in the US are directing significant funding to infrastructure initiatives, signaling huge growth potential for companies in the sector.

What's more, the American Society of Civil Engineers as recently as 2021 gave US infrastructure a "poor rating," further highlighting significant infrastructure investment opportunities across the pond.

Who are the sinkers?

However, not every megatrend in the booming tech sector has ridden the thematic wave. According to Jocum, sectors such as cloud computing, virtual reality and gaming stocks have seen outflows so far this year.

"I think there are certain pockets that just haven't been as popular because those areas were quite popular a few years ago," he said.

In addition, food and agriculture funds also saw modest outflows in 2024, particularly in the first quarter of the year. Through the end of March, according to Global X, food and agriculture showed more significant net outflows than any other sector.

Jocum also highlighted electric car and battery technology ETFs as an intriguing topic.

"What's interesting is that even though we've seen some outflows, investors are still quite bullish because they believe in the transition to electric vehicles," he said.

“It was pretty much the same in the US. We've seen a lot of money coming out of lithium and battery-type ETFs. But you know, it could be an area of ​​opportunity given that it's pretty undervalued right now."

While some unpopular megatrends have seen outflows in 2024, Jockum noted that ETF thematic penetration in Australia remains impressive overall.

Thematic ETFs in the US represent just 1% of the entire ETF industry, but they make up a larger 3% in Australia.

"In Australia, we're in positive flows when it comes to thematic ETFs ... which means the penetration may be a little more rampant here in Australia, even more incipient here," Jocum said.