Global X ETFs US Releases Three Thematic ETFs on a Single Day Giving Investors Exposure to Future Technologies
Popularity amongst investors for thematic investment strategies remains high. According to CNBC, assets in thematic ETFs have hit $133 billion, up from $27 billion before the pandemic.[1] As one of the key players in the field of thematic investing, Global X ETFs US releases three new ETFs on one single day, all of which track companies operating on technologies that are expected to shape the planet’s future. The three ETFs are the Global X Hydrogen ETF, the Global X AgTech & Food Innovation ETF, and the Global X Blockchain ETF. All ETFs track Solactive indices as their underlying, respectively, and started trading at NASDAQ on July 14th, 2021.
Hydrogen, the most plentiful element in the entire universe, serves as one of the promising clean energy sources in the fight against climate change. According to the EU Commission, cumulated investments in renewable hydrogen could reach between 180 and 470 billion EUR by 2050, and it is estimated that, by then, renewable hydrogen will match around one-fourth of the global energy demand, with annual revenue of around EUR 630 billion. The Global X Hydrogen ETF tracking the Solactive Global Hydrogen Index benefits from the vast potential that lies in this powerful element. The index serves as a representation of securities of companies that have business operations in the production or use of hydrogen as a fuel source. More precisely, the index includes companies operating in the following segments: Hydrogen Production, Hydrogen Fuel Cells, Hydrogen Technology, and Hydrogen Integration.
The second ETF is the Global X AgTech & Food Innovation ETF. the food sector has become one of the key global industries, accounting for around 10% of GDP worldwide.2 Due to the increasing demand from an expanding population, the necessity to reduce greenhouse gas emissions, and a shift in the population’s nutrition preferences, companies that implement innovations in agriculture and food manufacturing will have a solid base to grow in the near future. The Solactive AgTech & Food Innovation Index underlying Global X’s new ETF serves as a representation of securities of companies that have business operations in technologies for agriculture and innovative food production and distribution. On one hand, the index includes companies active in Relevant AgTech Activities such as Precision Agriculture, Controlled Environment Agriculture, or Agricultural Biotechnology. On the other hand, companies active in relevant food innovation activities such as Protein & Dairy Alternatives and Food Waste Reduction are eligible for index inclusion.
The third ETF, the Global X Blockchain ETF, tracks companies involved in business operations in the provision of blockchain technologies. According to a recent study, the global blockchain market size is expected to grow from USD 3.0 billion in 2020 to USD 39.7 billion by 2025 at an impressive compound annual growth rate (CAGR) of 67.3% during 2020–2025.[2] The Solactive Blockchain Index includes companies with business operations in the provision of blockchain technologies. The index includes, for example, companies active in Digital Asset Mining, Blockchain & Digital Asset Transactions, and Blockchain & Digital Asset Integration.
All indices derive their constituents via Solactive’s proprietary natural language processing algorithm ARTIS®. ARTIS® is utilizing advanced algorithms to parse high volumes of public documents evaluating companies’ exposure to various themes or topics. The sophisticated procedure not only detects potential index constituents considering a firm’s exposure to a theme but also ranks its importance to the very subject or industry.
Timo Pfeiffer, Chief Markets Officer at Solactive, comments: “Each now and then, new technologies emerge, opening an entirely new universe of application purposes. One recent example is blockchain technology, whose wide adoption will lead to new possibilities, for example, in data security and contract settling. With hydrogen gradually revolutionizing the transportation business, Global X’s second ETF not only includes stocks with a potential strong growth but also emphasizes on technology necessary in the fight against climate change. In conclusion, the three new Global X ETFs are a prime example of forward-thinking consideration on how to both give investors added value for their portfolios while fostering technology that will have an impact towards a sustainable future.”
[1] https://www.cnbc.com/2021/06/29/thematic-investing-has-taken-off-how-to-capitalize-on-trends-.html
[2] https://www.marketsandmarkets.com/Market-Reports/blockchain-technology-market-90100890.html