In a recent episode of the Relative Return podcast, Manny Damianakis, head of sales at Global X, said thematic ETFs provide exposure to specific sectors such as tech, crypto and lithium, serving investors’ desire for targeted investment strategies.

He attributed the ever-growing interest in thematic ETFs to the growing role of technology and the stellar performance of certain thematic sectors, such as artificial intelligence (AI), which has become a global sensation, catapulting the Magnificent 7 into the stratosphere.

To capitalize on this trend, in April Global X announced the launch of the Global X Artificial Intelligence ETF (ASX: GXAI) on the ASX, offering Australian investors exposure to innovation and growth in AI-related companies.

GXAI, which will be the first dedicated AI ETF to launch in Australia, tracks the Indxx Artificial Intelligence & Big Data Index.

GXAI is already seeing "significant traction," Damianakis said.

"All the research tells us that we're at the beginning of something pretty profound in terms of markets and where our economy and innovation is going," he noted.

Damianakis also noted crypto assets as attracting increasing investor interest.

Global X offers investors exposure to both Bitcoin and Ethereum through its Global X 21Shares Bitcoin ETF and Global X 21Shares Ethereum ETF, both listed on the Cboe.

Although Damianakis expects further growth in the crypto ETF space, he remains skeptical about crypto's path to mainstream adoption.

“I wouldn't see that happening because we haven't seen that with other alternative assets.

“I think you're going to see continued growth in the space, no question. There's definitely more interest and more understanding, and there's more with the advent of ETFs, making them more accessible."

Ultimately, Damianakis emphasized the importance of "lateral thinking" and diversification outside of tech-heavy sectors, advocating a balanced investment approach.

Left energy transition

In April, new data from Global X revealed that while thematic ETFs were favored by investors, those tracking the energy transition were left behind.

Although the energy transition dominated inflows into thematic ETFs in 2023, according to data from Global X, they fell out of favor with Australian investors in 2024 to become the worst performers among their thematic peers in the year to 31 March.

at that time Mark Jockum, product and investment strategist at Global X ETF, said Frutflows in 2024 may have less to do with energy transition ETFs themselves and more to do with the growing popularity of fields such as technology, semiconductors, cybersecurity and artificial intelligence.

Also, he told InvestorDaily, the majority of ETF flows are being allocated to low-cost vanilla ETFs this year as the core of client portfolios.

“To start the year, we saw a 'risk on' sentiment with money being allocated to broadly diversified ETFs on global stocks and technology themes. Investors seem to prioritize immediate gains over future ones, especially those projected to net zero emissions by 2050.

To hear more from Damianakis, click here.

Maja Garatsa Djurdjevic

Maya's career in journalism spans more than a decade in finance, business and politics. Now an experienced editor and reporter in all elements of the financial services sector, before joining Momentum Media, Maya reported for several established news outlets in South East Europe, looking at key processes in post-conflict societies.