ETF Areas to Ride the Thematic Investing Trend in Q4

Investors are constantly on a lookout for opportunities to increase their portfolio returns. Keeping in mind the factors that are currently inducing volatility in the market, investors can join the thematic investing trend. Meanwhile, as the U.S. Presidential elections are just a month away, investors have already started prepping their portfolios.

This election year could be rough keeping in mind the aggravating coronavirus pandemic. Meanwhile, there is uncertainty regarding the introduction of a coronavirus vaccine. Going on, there are other factors as well which are causing increased volatility and market turbulences in September, which is historically considered the worst month for stocks.

The coronavirus outbreak has caught investors’ attention, making them increasingly apprehensive about another round of lockdowns. Investors are also concerned about the uncertainty surrounding additional U.S. fiscal stimulus package, which shall be an absolute necessity for economic recovery. Furthermore, a report that showed global banks moved allegedly illicit funds over the past two decades also contributed to investors’ rising concerns and market sell-offs, according to a CNBC article.

Let’s take a look at some of the themes that are currently trending in the investment world.

AI, Robotics & Cyber Security

AI is fast changing the business landscape by expanding opportunities, driving revenues and enhancing efficiencies. It helps enhance almost everything, including advertising, healthcare, robotics, retail, video streaming, gaming and urban development.

We are living in an era largely dominated by AI applications and technological advancements. Amid the coronavirus crisis, demand for online services has increased which in turn has led to the dominance of the AI. Globally, the AI market is estimated to see a CAGR of 29%, rising from a worth of $42.8 billion in 2019 to $152.9 billion in 2023, according to an Analytics Insight article.

The robotics market is flooded with opportunities as robots are being used for jobs such as sanitizing hospitals, homes and workplaces along with monitoring, surveying, handling, and delivering food and medicines.

However, increasing adoption of these technologies is exposing businesses, governments and organizations to cyber risks. Given the severity of the situation, Cybersecurity Ventures expects the worldwide expenditure on cybersecurity to surpass $1 trillion cumulatively from 2017 through 2021. Per a Grand View Research report, the global cyber-security market is expected to reach a worth of $241.1 billion, at a CAGR of 11% from 2019 to 2025. Accordingly, our investors can consider Global X Robotics & Artificial Intelligence ETF BOTZ, First Trust Nasdaq Artificial Intelligence and Robotics ETF ROBT, ROBO Global Robotics & Automation ETF ROBO, iShares Robotics and Artificial Intelligence Multisector ETF IRBO, First Trust NASDAQ CEA Cybersecurity ETF (CIBR) and ETFMG Prime Cyber Security ETF (HACK) (read: Nvidia's Buyout of Designer Arm Put These ETFs in Focus).

Sustainable Investing

The coronavirus pandemic has increased awareness and consciousness toward sustainable investing, driving popularity of environmental, social and governance (ESG) funds. According to Morningstar, there were 534 index funds with focus on sustainability and overseeing a combined $250 billion as of the end of the second quarter of 2020, per a CNBC article. In fact, assets in sustainable index funds have quadrupled in the last three years in the United States and now make for 20% of the total, according to the same CNBC article.

In fact, going by the CNBC article, inflows into both active and passive ESG-focused funds together hit $71.1 billion during the second quarter, resulting in global assets under management crossing the $1-trillion mark for the first time.

Increasing awareness about ESG funds among companies marked by continued technological advancement and digital revolution has been observed since the pre-pandemic era. Notably, ESG investing has shown some resilience and continues to gain investor attention amid the pandemic.

To gain exposure to ESG investments, investors can consider iShares ESG MSCI USA ETF ESGU, Xtrackers MSCI USA ESG Leaders Equity ETF USSG, Vanguard ESG U.S. Stock ETF ESGV and Nuveen ESG Large-Cap Growth ETF (NULG) (read: New ESG ETFs Hit Market on Growing Popularity).

Alternative Energy Funds

Alternative energy includes any energy source that acts as a replacement to conventional and non-renewable fossil fuel. These energy sources are also called renewables as they are continuously replenished through natural processes. The space has been hitting headlines these days for several reasons. Increasingly, big corporations are making or promising investments in achieving the most coveted carbon neutral status. Also, the green energy space has been a hot discussion topic in the ongoing U.S. election campaign.

According to the International Energy Agency (IEA), renewable energy sources are expected to make up 30% of the world’s electricity by 2024 in comparison to the current 26%. Per Allied Market Research, the global renewable energy market is expected to reach a value of $1.51 billion, seeing a CAGR of 6.1% between 2018 and 2025.

Thus, investors can consider the following ETFs -- iShares Global Clean Energy ETF ICLN, Invesco Solar ETF TAN, First Trust NASDAQ Clean Edge Green Energy ETF (QCLN) and ALPS Clean Energy ETF (ACES) (read: Sector ETFs to Win/Lose If Biden Wins Elections).

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iShares Global Clean Energy ETF (ICLN): ETF Research Reports
 
Invesco Solar ETF (TAN): ETF Research Reports
 
Global X Robotics Artificial Intelligence ETF (BOTZ): ETF Research Reports
 
ROBO Global Robotics and Automation Index ETF (ROBO): ETF Research Reports
 
iShares ESG MSCI USA ETF (ESGU): ETF Research Reports
 
Vanguard ESG U.S. Stock ETF (ESGV): ETF Research Reports
 
First Trust NASDAQ Artificial Intelligence and Robotics ETF (ROBT): ETF Research Reports
 
iShares Robotics and Artificial Intelligence Multisector ETF (IRBO): ETF Research Reports
 
Xtrackers MSCI USA ESG Leaders Equity ETF (USSG): ETF Research Reports
 
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