During the VettaFi Asset Allocation Summit in April, advisors told VettaFi about their strong interest in thematic ETFs. More than a third (35%) of attendee respondents said they expect to add to thematic ETFs in the next three months. That’s more advisors than those that selected fixed income (31%) or commodity ETFs (27%).
According to Christian Magoon, founder and CEO of Amplify ETFs, the modern investment landscape has outgrown the “boxes” of traditional sectors. In a separate April virtual event regarding the evolution of thematic investing, Magoon emphasized that today’s most significant disruptions span across multiple industries, making traditional sector-based diversification less effective for those seeking growth.
See related: Amplify Offers Unique Angles on Income, Thematics
The Power of the Theme
Magoon highlighted that a single thematic thesis often requires exposure to four or five traditional sectors. He points to the Amplify Lithium & Battery Technology ETF (BATT ) as a strong example. “You have metals and mining companies in there. You have automotive companies there,” Magoon explained, adding, “You also have battery technology, chip companies and manufacturers of actual battery storage equipment.” By utilizing a thematic approach, investors can conveniently capitalize on timely trends with long durations that a single sector fund would miss.
This strategy is often viewed as a satellite complement to a core allocation. While a traditional 60-40 portfolio may lack inspiration, Magoon noted that adding “sizzle” through thematic growth can provide the alpha many advisors seek. For most investors, Magoon suggests that three to four targeted themes are sufficient to satisfy this growth sleeve.
Navigating Innovation: The Thematic Synergy of AI and Nuclear
The range of popular themes continues to expand as technology and policy shift, creating powerful new synergies. The ROBO Global Artificial Intelligence ETF (THNQ ) allows investors to capture the rapid growth of artificial intelligence. Investors are increasingly looking beyond foundational large language models toward the physical infrastructure required for scale.
However, the massive computational power required to fuel this AI revolution has created an unprecedented demand for reliable, carbon-free energy. This is where the Range Nuclear Renaissance ETF (NUKZ ) becomes a critical partner to the AI story. As the Department of Energy announces major pushes for nuclear expansion to support power-intensive industries, NUKZ captures the entire nuclear value chain. NUKZ offers exposure to global companies participating in the nuclear renaissance, from uranium enrichment to engineering firms to utilities.
Similarly, the Procure Space ETF (UFO ) represents the final frontier, capturing the agility of assets converging in the commercial space race. The satellite industry and orbital services are expanding, with a high profile IPO of SpaceX coming soon. UFO offers a diversified way to play a sector that was once the exclusive domain of governments. UFO’s holdings are largely split between industrials and communications services companies.
Don’t Try to Pick a Winner
Instead of trying to pick a single winner in these complex regulatory and technical environments, Magoon advocates for “buying a professionally selected portfolio by an index research group like VettaFi,” noting that it “gives you access to the diversification and research they do in one convenient position.”
Magoon’s thematic philosophy encourages investors to own an entire investment thesis through an ETF wrapper. Doing so enables them to be positioned for the structural shifts of the future.
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vettafi.com is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for BATT, NUKZ, THNQ and UFO, for which it receives an index licensing fee. However,BATT, NUKZ, THNQ and UFO are not issued, sponsored, endorsed, or sold by VettaFi. VettaFi and its affiliates have no obligation or liability in connection with the issuance, administration, marketing, or trading of BATT, NUKZ, THNQ and UFO.
