Morningstar: European thematic ETFs shows assets more than double and menu expands

January 19, 2021

Morningstar today published its European Thematic Roundup 2020, looking at thematic ETFs that select holdings based on their exposure to a specific investment theme. These funds attempt to profit from long-term macro or structural trends such as environmental changes, demographic shifts, or technological advances.

Key findings include:

• European thematic ETFs eye-catching returns have helped attract a record EUR 9.5bn in net inflows. Assets under management almost trebled from EUR 8.2bn to an all-time high of EUR 22.7bn.
• More than half of net inflows were channeled into Energy Transition or Connectivity themed funds.
• In a turbulent year for markets, thematic ETFs were some of the stand-out performers. 33 of the 36 European-listed thematic ETFs outperformed the MSCI World Index and most by a handsome margin. Even the worst thematic performers managed positive returns.
• A record 17 new thematic ETFs were launched and zero closed.
• Growth in the market has also attracted new entrants. The most notable of these is US-based thematic ETF specialist Global X, who currently manage over EUR 17 Billion in assets in the States. Initial European launches cover the video games and eSports and telemedicine and digital health, with more expected to follow.

Kenneth Lamont, Senior Analyst, Manager Research, Passive Strategies, comments: “Thematic ETFs in Europe emerged as one of the big winners in 2020, eye-catching returns helped attract a record EUR 9.5bn in net new assets across the year. These strong flows helped assets under management more than double from EUR 8.2bn to an all-time high of EUR 22.7bn.

“One third (EUR 3.1bn) of all thematic ETF net inflows were poured into Energy Transition themed funds over the course of the year. The disruptive volatility experienced in the oil markets led many to seek alternatives and to reevaluate the associated risk and return of alternative energy sources. The favourable U.S. election result and other pro-environmental political developments globally were also supportive.”