Thematic ETFs: Strong Conviction or Pure Marketing
The amount of thematic ETFs coming into the market this year is quite shocking and Iāve spotted a clear pattern with thematic ETF products that I would like to share with you. Not just that, Iām also going to share with you my favorite tip to help spot the ETFs that will likely cut through the crap, survive after launch and actually make strong gains. So, first for the pattern Iāve noticed with examples to prove my point as always: Thematic ETFs are usually launched when the underlying theme is at peak Hype with providers actively launching when themes are hot to exploit investorsā tendency to chase recent performance. Examples: - $LAZR launched within 30 days of most its underlying assets hitting ATH and at the beginning of the biggest AI crash on record. - $LYTE & $NCLD launched 3 days after the Situational Awarenessās forced liquidation cleared the sellers out of AI infrastructure space starting a new rally. - $NASA launched on the hype of SpaceX IPO actually launching 1-day before the confidential SEC filing and then crashed hard post IPO. - $DRAM launched post a massive memory rally created by one of the biggest supply bottlenecks in history. Does that make them bad products? No, but it does make them pretty good marketing tools first and investment products secondā¦ The underlying holdings are amazing companies, the themes are often very valid, but the launch timing is optimized for asset gathering, not for investor returns. These ETFs are run by great marketing teams who are following trends, social feeds, sentiment and then packaging a product to meet the demand at the exact moment it peaks, some will still obviously succeed regardless of launch time, but those also share a common factor as Iāve noticed and explain below. Now let me share with you the ultimate signal I look for in a newly launched thematic ETFs: My number 1 watch out is AUMā¦ if itās below $1B thatās probably the result of major hype and crowding by retail investors with no or limited institutional conviction. I want to see inflows rapidly growing cause that is a confirmation smart money is also investing on your side and not betting against you. Corgi launched 28 thematic ETFs on the same day May 6th, including $CQTM, $STYL, $WR and $NYNY the problem is that most of them will fail due to the simple fact that ETFs with similar fees need between $30M-$50M AUM to justify the investment and the majority of there are $1M or less of AUM. A big red flag for me. Now letās use capital inflows or AUM growth as a pattern before rapid theme breakout and I can give you 3 amazing examples: $DRAM crossed $1B after 10 days of launch and then surged 198% in June, currently sits at +117% YTD and $26B AUM $QTUM this one was lost at sea for 4.5 years until the whales found it and got to $1B AUM in Jan. 2025 and surged 80% after that and now stands at +34% YTD and $5.5B AUM. $CHAT hit $1B late 2025 and surged +100% after, currently sits at +49% YTD and ~$2B AUM. So, my point here is I use AUM growth as a factor for identifying institutional interest and confirmation for the themes Iām personally watching and I WAIT until enough of that validation is positioned before making a move. Institutions move markets and know a lot more about future prospects of a company or a specific theme than us retail investors ever willā¦ so getting a confirmation of their interest in a theme is a good sign to have and that only shows as AUM grows beyond a specific point. ( this point seems to be confusing some people, ETFs DO NOT move based on inflows or outflows of investment, they move inline with the price movements of the underlying stocks, what Iām reflecting on here is a signal of institutional interest) I joined the $DRAM train when AUM crossed $5B and my cost avg. is $38 currently +46%, but having $26B of institutional money sitting next to me even after an extreme downturn is keeping me very comfortable my remaining position will continue to grow. Another important rule for me: these types of thematic ETFs are never a hold and forget for meā¦ they are timed satellite positions to capitalize on a trend that will deteriorate over time. They usually show extreme concentration behind a handful of names making the quite volatile to single company news and downturns are extremely aggressive, which is why I donāt use them in my core and trim to capture gains as growth momentum continues. I hope this helps anyone interested in thematic ETFs understand how I evaluate these products, and if you watch this pattern youāll notice it cuts across most successful thematic ETFs that survive and flourish. Not financial advice, Do your own research
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14 Comments
Kaya @kaya_guard Ā· 4h
How do you track aum regularly? Manually?
Jason @retiredjay Ā· 5h
How do you track inflows? I like your evaluations š
Jonny Blaze@jonnyblaze Ā· 2h
Great post man! I lost some money on $NASA I remember that one. Fortunately never jumped on $DRAM thankfully lol. I'm curious your thoughts on a tiny new ETF I bought again on a whim called $WDRN physical AI and robotics ETF. I'm down some already but bullish on the sector as the next stepping point for the technology.
Enes TB@enestayfur Ā· 4h
Okay so basically you buy etfs and sell etfs, i am not getting your point mate, everyone buys an etf, rode it, and sell it when underlying sector starts cooling of, or just keep it for the next phase. You are stating the AUM , but whats the point ? Sorry, i am just trying to understand what you r telling here Moe
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