On this week’s episode of ETF Prime, host Nate Geraci sat down with VettaFi Senior Industry Analyst Kirsten Chang to unpack ETF flows during the second quarter of 2024. Afterward, Geraci welcomed Rohan Reddy, director of research at Global X, to discuss the investment case behind uranium and how nuclear power compares to other sources of electricity.
Flows Into Equity ETFs During the Second Quarter
There are three critical takeaways when looking at flows into equity ETFs during the second quarter, Chang said.
“First off, the broad-base large-cap core game continues to be strong. That’s not changing anytime soon,” she added.
The cost-conscious mindset that emerged during the first quarter continued through the second quarter. There’s plenty of love for (IVV ), (VOO ), and (SPLG ) (the cheaper alternative to (SPY )). Meanwhile, SPY saw outflows.
“Second, tech came out on top. Growth, high quality plays dominating the quarter,” Change said. “That’s something advisors told us early on this year they’d be focused on and so we saw that in the flows”
Finally, there’s no ignoring the AI story, Chang noted. The AI ecosystem had a huge reach, datacenter needs are driving up a kind of power demand, appetite we haven’t seen since the dot-com boom.
Bond ETF Flows in the Second Quarter
Treasury yields saw a turnaround in late April, according to Chang. The 10-year peaked around 4.7% and then dropped 50 basis points.
“Rate cuts are still up in the air but investors have really been betting on both ends of the curve,” Chang said. “We’ve also seen piping hot interest in active fixed income ETFs.”
Chang also noted a wave of money pouring into global bond ETFs in June. Finally, the senior loan space in general has been heating up.
Spot Ether ETFs, Solana ETFs, and the Upcoming Election
VanEck and 21Shares last week filed to launch Solana ETFs. Additionally, spot ether ETFs are poised to launch shortly, making now an exciting time in the crypto space.
For spot ether ETFs, Chang said the funds look to be ready for a mid-July launch. SEC chair Gensler said the approval process was going smoothly with the products on pace to launch this summer, she added.
As for Solana ETFs, Chang stated that VanEck has a history of being a first mover in the crypto space.
“They first filed for a spot ether ETF back in 2021. They like throwing their hat in the ring early,” Chang said. “It’s interesting that they’re just skipping over a futures ETF and just going straight to a spot ETF. But I think overall is Solana is very similar to ether. They view it more as a commodity.”
Solana is on the fastest blockchain network, according to Chang. Transaction costs are very low, and it’s more energy efficient. However, the tech is still complex and it’s still relatively new. Therefore, a number of analysts Chang has spoken to said this probably won’t turn into a real conversation this year.
The Solana ETFs are basically a bet on a new administration that’s more crypto friendly, Geraci added.
The Investment Case Behind Uranium
The Global X Uranium ETF (URA ) has more than doubled its assets in the past year as investors look for uranium exposure. Notably, the ETF is up about 43% over the trailing one-year while the S&P 500 is up 25% during the same period. Boasted impressive returns over the past year, uranium also presents a long-term investment opportunity in the form of nuclear power.
An advantage of nuclear power is that it’s clean. It generates virtually no greenhouse gas emissions during operations, Reddy said.
“It also tends to be very reliable,” Reddy said. “So I would say compared to solar and wind, this has been a key advantage just because it doesn’t have any of those intermittent issues that like solar and wind might have.”
Listen to the entire episode of ETF Prime:
For more news, information, and analysis, visit VettaFi | ETFDB.
