As exchange-traded fund industry leaders are meeting for the Inside ETFs, the world's largest ETF conference, this week, let's take a look at the latest trends that will be discussed. Issues like the newly SEC-approve non/semi-transparent fund structures, ESG (environmental, social and governance) funds and thematic funds are all at the top of the schedule for discussion this week.
First, Nontransparent or semitransparent fund structures have been attracting new assets to exchange traded funds since their SEC approval last year. These funds do not have to disclose their actual holdings on a daily basis, setting them apart from mutual funds and traditional ETFs. Instead, funds under this structure will publish portfolios with other stocks that are representative of the fund's underlying strategy.
ETFs as a whole have been moving the market away from mutual funds for a myriad of reasons. To start, these are more active trades due to their presence on an exchange every trading period. ETFs are also much cheaper, hence why money has been pouring in to active funds like SPDR S&P 500 ETF Trust (NYSE: SPY) and Invesco QQQ Trust (NASDAQ: QQQ).
Second, ESG-focused ETFs and stocks have also taken center stage for ETF investors for 2020, due in part from BlackRock's (NYSE: BLK) commitment to more environmentally-friendly investments. Trades to look for in this market are iShares ESG MSCI EM ETF (NASDAQ: ESGE) and iShares ESG MSCI USE ETF (NASDAQ: ESGU).
Finally, thematic funds are ETFs that follow investor trends of gravitating towards more narrowly focused strategies. Themes like robotics, cloud computing, video gaming, and cannabis have started to take over the market and are expect to see modest gains in 2020. For example, VanEck Vectors Video Gaming and eSports ETF (NASDAQ: ESPO) performed +42% higher in 2019 and Global X Robotics & Artificial Intelligence ETF (NASDAQ: BOTZ) gained nearly +31% for the year.
Here are funds in focus this week:
Semiconductors: Semiconductor ETFs returned big in the past year despite the pervious U.S-China trade war. Despite their resilience, U.S. chip stocks are slumping this week mainly due to their large exposure to China and the coronavirus hitting Chinese stock particularly hard. Currently, the impact of the virus on global markets is predicted to be short-term and semiconductors are in the position to grow in 2020, making this a good time to invest. Funds focus on this market include: Invesco Dynamic Semiconductors ETF (NYSE: PSI), VanEck Vectors Semiconductor ETF (NASDAQ: SMH), SPDR S&P Semiconductors ETF (NYSE: XSD), iShares PHLX Semiconductor ETF (NASDAQ: SOXX)
Energy: Crude prices have been taking a large hit recently from global investment fears surrounding future trade. Funds in focus: Energy Select Sector SPDR Fund (NYSE: XLE), iShares U.S. Energy ETF (NYSE: IYE), United States Oil Fund (NYSE: USO), United States Brent Oil Fund (NYSE: BNO)
Biotech and Pharmaceutical: As companies begin to work towards a vaccine for the spreading virus, these funds stand out: iShares Nasdaq Biotechnology ETF (NASDAQ: IBB), SPDR S&P Pharmaceuticals ETF (NYSE: XPH), VanEck Vectors Pharmaceutical ETF (NASDAQ: PPH), SPDR S&P Biotech ETF (NYSE: XBI), iShares Dow Jones U.S. Healthcare ETF (NYSE: IYH)
Consumer Staples: Consumer Staples cleaning products like Clorox (NYSE: CLX) are gaining attention due to consumers focusing on cleanliness amid the virus outbreak. Funds include: Consumer Staples Select Sector SPDR Fund (NYSE: XLP), iShares Core S&P 500 ETF (NYSE: IVV), Invesco S&P 500 Equal Weight Consumer Staples ETF (NYSE: RHS)