When investigating thematic ETFs, it can be challenging to separate the hype around a particular space from the reality of that space. Geraci noted that “Investors may hear about certain companies within a thematic category where there is a lot of media buzz and hype, and investors get excited – they want to own these companies – but then when you actually look at the reality of the situation in terms of what these thematic ETFs hold, the buzzy companies aren’t always there.” Islam observed that thematic ETF interest shot up during 2020, a completely different environment from what we’re in right now. “Broader equity markets were doing well,” she said, continuing, “crypto became really popular. Investors were just becoming much more confident. They were attracted to these individual stocks in the media or on Reddit, returning these massive amounts in a short amount of time.” She thinks many investors were looking for the next Tesla or Apple, but a smarter play in thematic investing isn’t to aim for an instant winner but to play a long-term shift in behavior, technology, or regulations. Electric vehicles are a crowded space in the ETF world. Islam sees two interesting sides to EVs; on the one hand, she notes that there are exciting start-ups building new EV products, trying to carve a slice away from Tesla’s 75% market share. On the other hand, legacy companies like Ford are slowly shifting production away from standard combustion to EVs. “I think investors and consumers are more excited about the ‘new entrant’ story first. Not only are these products flashy and high tech, but the stocks are really exciting,” she said, noting that a number of these new entrants haven’t even hit production yet and must contend with supply chains and other challenges. Islam said, “when you look at these ETFs, most are based on that rules-based index, and they actually end up hedging their exposure to some of those smaller, more volatile stocks.” This creates a disconnect between what investors might think they are getting and what is actually inside popular EV ETFs such as the First Trust S-Network Future Vehicles & Technology ETF (CARZ B), the iShares Self-driving EV & Tech ETF (IDRV C+), and the Global X Autonomous & Electric Vehicles ETF (DRIV B). Geraci asked Islam if battery technology ETFs such as the Global X Lithium & Battery Tech ETF (LIT C+) or the Amplify Lithium & Battery Technology ETF (BATT ) could be decent proxies for the electric vehicle theme. “I think somewhat,” Islam responded, noting that there is a lot of crossover between holdings and have correlations between .7 and .8. “But there are some key differences,” Islam said, pointing out that battery ETFs tend to have more exposure to China. Because they tend to cross into other sectors, such as commodities, battery ETFs have sometimes performed better than EV ETFs. Like any disruptive tech stocks, these funds have had some challenges this year. But Islam sees plenty of reasons for the EV theme to potentially thrive in the future, given coming regulations. “I think the EV space is as concrete as you can get when it comes to a thematic idea.” She believes electric vehicles are happening, it’s just a matter of capturing how it happens. She said, “That’s the beauty of an ETF, it can diversify away that single-stock risk that you get when you are trying to find the next Tesla out there.” Islam also thinks that many people don’t fully understand space. First off, fully autonomous vehicles are still in the works and are not truly finished products. She also noted that “there are also electric vehicles beyond cars and trucks. There are electric aircraft and passenger drones, and several public companies are already in that space. You have to anticipate all this.” Pivoting to a more general look at thematics, Islam thinks they should be a smaller portion of the portfolio as a supplement to core holdings. “A lot of these are higher growth, higher risk/reward investments.” Moving to crypto, Roxanna noted the similarities that space has to the EV space. “It is important to remember this sector is also very new. Bitcoin itself has been around less than 15 years.” She sees crypto as historically a sentiment-based space that is now seeing a broader shift as regulations are in the pipeline. “I don’t think it has run its course; there’s a lot of room for it to run,” she said, cautioning investors to do their due diligence. “You have to make sure what you are investing in lines up with your expectations.”