This Year's US ETF Keywords: 'Active, Thematic, ESG'

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[Asia Economy Reporter Junho Hwang] Daishin Securities identified active, thematic, and ESG (Environmental, Social, Governance) as the key keywords for U.S.-listed exchange-traded funds (ETFs) this year.

First, active ETFs are expected to continue gaining attention this year due to their ability to offer customized investments according to investor demands. Although the assets under management (AUM) of active ETFs remain smaller compared to passive ETFs, the active ETF market, which had been shrinking until 2018, has been growing since 2019. A representative active ETF is ARKK. Its recent performance has been weak. However, the market interest in active ETFs is high enough that inverse and leveraged ETFs based on ARKK have been launched.

In the U.S., 26 ETFs have been launched so far this year, of which 9 were thematic. Themes that attracted attention in the ETF market last year include Metaverse (META), Autonomous Driving (DRIV), Cloud (SKYY), and NFT (NFTZ). Since ETFs tracking major existing indices already exist on a large scale, new ETFs based on new asset classes or themes are expected to continue being launched this year.

ESG is gradually becoming a mainstream theme in the ETF market. Among them, environment-related ETFs corresponding to the "E" in ESG have diversified in terms of countries and investment targets. Among global ETFs newly listed last year, 5.9% included environmental keywords such as ESG and carbon emissions. Considering that many pension funds and asset managers incorporate ESG in their management strategies even if ESG is not explicitly stated in the fund name, ESG is expected to continue attracting interest in the ETF market this year. A related ETF is ESGU, which invests in U.S. ESG companies.

Haein Kim, a researcher at Daishin Securities, analyzed, "The ETF trends for this year, commonly presented by global asset managers and research at the beginning of the year, can be summarized as active, thematic, and ESG. There is growing interest in ETFs that can quickly respond to the emergence of new investment targets and industries."