ETF Edge - “Thematic” Comeback 11/10/25

Episode Date: November 10, 2025

Thematic ETFs were all the rage. Then they weren’t. But could 2026 be their comeback year… all thanks to what stole their spotlight to begin with? Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The ETF Edge podcast is sponsored by InvescoQQQ. Let's rethink possibility. Investco Distributors, Inc. Welcome to ETF Edge, the podcast. If you're looking to learn the latest insights on all things, exchange, traded funds, you're in the right place. Every week we're bringing you compelling interviews, thoughtful market analysis, and breaking down what it all means for you, the investor.

I'm your host, Dominic Chu. So could the return of thematic ETFs and investing trends be the big theme of 2026, so to speak. Here's my conversation with Ryan O'Connor, the CEO of Global X-ETFs, alongside Mike Aiken's, the founding partner of ETF Action. Maybe I'm going to start Ryan with you first and right off the bat, just ask how much of a big deal AI, artificial intelligence has been to this whole idea, the concept of thematic investing. Look, it has been a very big deal. And ultimately, from our perspective, we think the revenue gains are real that you see. We see the productivity gains being real.

And ultimately, we see this as being a transformative trend and theme that we think is going to support markets and our business over the long term. Just how much has it been a driver of the flows that you've seen into GlobalX? Now, I'm going to put a timeline that's not exact, but maybe roughly the last two or three years. That's when things really took off for AI. Sure. And look, I'm sure Mike has got some views on this as well from his perspective. I would say AIQ, which is our flagship AI fund, is now a $7 billion fund, of which we've done $3 billion in net new flows just this year.

Even with last week's headlines around potential questions around AI evaluations, et cetera, we saw over $100 million in net new flows just last week alone. So it's been a real driver kind of of the story for us. And as we've talked about, not just about the broad-based AI story, we're getting a little bit more granular as well, right? Things like data centers, things like energy to fuel a lot of this demand. clean energy from uranium, liquid national gas, as well as the chip stack as well. So it's not just about the AI story. It's broadening and getting more specific at the same time.

Wow. So broadening and more specific at the same time. So Mike, I'm going to throw this one to you. If you look at the bigger picture for macro investing right now, thematically with regard to ETFs, it has been very much about AI recently. But if you take a look at the trend overall, it's been a pretty decent evolution from where we were, say, 10, 15, 20 years ago when everything was straight, passive, large-level index-worthy. Now, a lot of that growth, maybe understandably so, is less away from that and more towards active management and thematic investing.

How big of a deal will this be? And at some point, will active and thematic-type investing overtake the passive side of things in ETFs? So I think you have to, I wouldn't call thematics active yet, I mean, I think there's both ways to play it. You can play it active or passive. I mean, Global X is a leader in providing passively managed thematics. They're just providing narrower passages into the market to get exposure to exactly that theme you're looking for.

I think that's the biggest thing we've seen since, say, even in just last five years, where we think about kind of the arcade A when we saw record flows into thematics. Today, at ETF Action, we have 12 categories within thematics and then dozens of subcategories within that. You guys talking about AI, disruptive tech, you know, has seen almost 20 billion in flows here today, but 15 billion of that has ETFs with AI in the name. So that's definitely driving it. But I think part of the evolution is sectors are not so easily defined anymore. So you just think about thematics. It's a way to get more niche within the marketplace and those subgroups or sub sectors, industries of the marketplace, which allow asset allocators to really drive into.

a theme that they're looking at. Of course, this introduces crazy tracking area. I mean, we have nearly 400 ETFs at ETF action that we classify as thematic. And, you know, the top performer is up over 150% year to date. And there's several that are, you know, negative 10 plus 10%. So this is, this introduces a lot of due diligence. But I think that's what's great about having firms like Global X who focus on this area of the market and provide the research because, you know, there are long-term themes that you want to be invested in, but there's also tactical trades. And with, you know, that many ETFs, part of what you're seeing is you're seeing flows move within POMatics like we're used to seeing flows at the sector level. Okay, so let's talk about that.

Because, Ryan, if you take a look at the way things are shaping up right now, there is a lot more activity. I mean, at this point, I think I saw a stat that there are more single, there are more tickers for ETFs right now than there are for single stocks within the market. That's just how more robust things have gotten. A lot of that is due to thematic investing. A lot of that is due to active and the kind of propagation of some of those types of products. I wonder, though, from a trading perspective, just how much do you feel as though your client base at, say, a GlobalX, caters to some of those more active traders who like to kind of take very tactical short-term moves around these themes, as opposed to those who say, buy

an ETF that's thematic and then hold it for a duration of time, maybe months or even a year or plus? Great, great question. Look, from our perspective, the themes that we get most excited about and the themes that we have in our lineup, you know, we see as being long-term secular trends that over the long-term our clients are going to stick by us with and ultimately add value within their portfolios too. So, look, there's always, to Mike's point, going to be, you know, tactical opportunities around the edges. But at the end of the day, when we come, you know, with an ETF and a theme, our investors and our clients can trust that we are coming with something that we have thought about distinctly and over the long term believe that it's going to do,

you know, do good things in their portfolios for them. So that's how I would think about that. So, Ryan, if you take a look at the suite of products that you have, do you notice that there are certain types of products and certain types of themes that you have products tracking that tend to gravitate or try to draw in more of those tactical short-term traders as opposed to those people who are, say, more longer term in focus. Can you see the kind of trading activity that goes around some of those types of products? Yeah, look, absolutely. We can see on a daily basis, you know, one of the beauties of ETS is the fact that you can trade them throughout the day based off of what your views are. But I would say some of the themes that we are most excited

about that we're seeing happening right now real time. We're seeing, you know, really persist over the long term. One example is global defense technology, right? So this is a product that we launched at the end of 2023 and September of 2023. We're already over $5 billion in assets. We've seen $3 billion in net new flows into this product. This year is the first year ever that all NATO countries have finally met that 2% of GDP as a proportion of their defense spending. And they've doubled down on that committing to by 2035 seeing 5% of GDP spent on defense.

So that's an example of something that we see over the long term persisting. And ultimately our customers have looked to us for those types of exposures over the long term. Mike, it's an interesting point here because these themes, they move about, they shift around based upon kind of prevailing even headlines or investor sentiment around certain types of areas. From your perspective as you track the kind of macro picture and all the funds that you keep at least tabs on, what do you think the shelf life is for some of these types of themes? we know that there's not a huge amount of track record for thematic investing, but just how much are investors letting some of these themes play out, and just when do they have maybe their patients run out for some of these before they exit? Do we feel as though there are secular trends that people will bet on the long term for,

quarters, years, and maybe beyond, or those that they kind of think, or they're just trying to capitalize on the momentum and price action for the moment. So I think there's always going to be both, right? You have tactical traders that are always looking at different dynamics. And that's a big part of thematics. Tactical traders love them. They're going to use them.

It's, you know, at the heart, ETFs are an allocation tool. Some are designed to be used long term. Some are designed to be more shorter term. I think to Ryan's point, most of the themes that we look at across the marketplace are designed to play out over a long period of time. But there's going to be ebbs and flows in that. And I think just look at disruptive tech as an example. We have that as one of our 12 baseline thematic categories at ETF action.

And there's about 12 subgroups within that. But a couple of the more mature, if you will, themes in that, some of the original thematics that come out, you know, well over a decade ago, like cloud computing, next gen connectivity, those have seen, you know, multi-billion dollar outflows over the last few years. And one can argue it's because those are very mature themes now. They've made their way into the broad indexes at scale. so you already have allocations to that.

So I wish I could put a better time frame now. I think every theme is unique to itself. So some are going to play out longer than others. But I think that's part of the story with this space is that, yes, there's definitely, you know, the idea I'm going to invest in this because I believe it's going to play out over the next three to seven years. It's a long-term growth opportunity for my portfolio based on whatever macro catalyst. But at the same time, themes can run very, very quickly.

So you should be taking advantage of, hey, if it goes up a ton, you still want to have allocation to the theme, but maybe take some off the top. And vice versa, you see a lot of themes that get under significant pressure, and that introduces an opportunity to maybe leg in a little bit more. So, Ryan, from that perspective, then, let's talk a little bit about just how much your client base is segmented out. You kind of understand who is investing or purchasing your products. given what we just heard from Mike, it sure seems like there needs to be a little bit more handholding these days, a little bit more education, a little bit more perhaps just dampening of sentiment given some of the swings that we're seeing.

How much now are advisors or the institutional community using these types of products for their client portfolios as opposed to, say, a retail investor or trader, say like myself, just buying the product saying, I want to express a view. How much of that is an RIA-driven? It's a great question. So the majority of our client assets, I talked about Global X approaching $75 billion in assets. The majority of those assets are coming from intermediary and institutional type clients. And for us, I think some of the most exciting, you know, days that we have, you know, at Global X, are when we engage with those clients more and more to help them sift through and understand what's going on in the ETF universe, but also start to utilize ETFs in new and different and interesting ways. You know, the data that Mike and others know a ton about in terms of ETFs taking share from other registered vehicles is exciting, right? We continue to take share from mutual funds, continue to have record product launches,

continue to have record flows over the trillion dollar number so far this year. But for me, some of the most exciting things are some of the anecdotal conversations we're having with clients around taking share from things and product types that aren't really going to be captured within that data. So things like structured products, things like swaps, where we've got sophisticated intermediary institutional customers coming to us saying, I want a basket, I want exposure in a lower cost, transparent, tax-efficient wrapper. And ETF is, of course, perfect for that. So it's a long-winded way to say intermediaries and institutions continue to broaden the way that they're using. ETFs and it's exciting for us. Brian, to follow up on that, just how quickly, so you're a fund

manager, you manage these assets, you come up with the concepts, you put these portfolios together, what is the lead time now? When you talk about, say, a client or a group of clients bringing you a set of ideas that you think, hey, this could be a good product for us. Yep. What is the lead time between conceiving of a strategy and a type of product before you can actually bring a viable one to market in the Global X family. It's a great question. Of course, it depends upon what that idea is and where it is kind of in the ideation phase. But what I would say is for very well-baked ideas that we have an idea as to where we're going with it and what the customer ends up wanting, there's a 75-day clock at the SEC in terms of, you know, in terms of our putting in a filing

and working with the SEC to get these listings out the door. So it's quite, you know, it's a quite quick turnaround. And ultimately, there's never been an easier time to launch ETFs based off of the ecosystem that's come together to support it, given the flows, and it's exciting time for customers. No question. Mike, this is also a good point to bring up with regard to just how many options there are out there. At what point do we feel as though it is overwhelming, just the amount of product that's being brought to market here, and just how much more do, say, retail traders or investors have to rely on professional advice or some kind of a portfolio manager to help make decisions for this kind of thing. Do you feel as though that's more of a secular trend because there

is such a bigger universe of these types of products to navigate towards? Well, first and foremost, I believe that, you know, the professional aspect brings more than just the investment management to the table. There's a whole ton of reasons we won't get into today why investors should think about having professional management help from that perspective. But, you know, as the market evolves in terms of products, so does the technology, right? So there are many tools out there, many data sets that allow you to look under the hood. But every time you see a new ETF come to market, it introduces, you know, significant tracking error from just investing in the market. So we believe strongly at ETF action that the growth of the

ETF market is overwhelmingly positive to the investor experience. But with anything, with choice, you know, is opportunity also risk? And I think you do have to look beyond the name of these portfolios. We guys were talking, we talked to AI as we started, but just within the 18 ATFs that we have classified in our AI bucket of disruptive tech, you know, there's over a 60% divergence of return in those 18 names here to date, right? So it's just really important that you have to go beyond the hood. And then, of course, you have the whole financial engineer side of the market, which is really taking off. And some of it is good, but a lot of it is going to be noise. Well, it's a lot of it, too, is this.

advent in the development of structured products within ETF format, there are defined outcome ETFs and everything else that go along with it. Maybe Ryan, as we talk about that, we brought up the idea that many of these products are tied to indexes and that some of these investors want these products because they are passive in nature and track an index. I guess my question is, how hard is it to come up with an index? And then what exactly goes into that process? And then the back testing or simulation that goes along with it, when it comes to that, how much do investors have to scrutinize the kind of index and methodology that they're investing in with an ETF product? It's a great question. I think the short answer is it's really important, you know, and it's a huge

component of what we do at GlobalX and how we think about working with our index provider partners to come up with thoughtful exposures for our clients. You know, to Mike's point, we've seen a massive explosion and the number of products that have been put out there, we think it's really, really important for ETF sponsors such as Global X to think through, first of all, what those exposures are in terms of what can be transformative, what is useful over the long term for clients to do that early. One example we talk about is AIQ. We launched four years before the public release of ChatGPT, so that's important.

But then the second thing that I would say is just constantly being thoughtful around how you are structuring that exposure when you determine. that it is something that we think can be transformative. That conversation and that work that we do with the next providers is really at the core of providing really durable, interesting, and well-thought-out themes. All right, so those themes well-thought-out that they are, Mike, I'll toss this one to you to kind of close things out on your conversation here.

What exactly is, in your mind, going to be the next big frontier when it comes to thematic investing? You know, AI may or may not have legs, depending on how the market views things we saw, little bit of that corrective action, if we can even call it that over the last couple of weeks. But if we're going to look beyond AI, what are some of those areas of the market that you think will be the next big thing post AI? And what exactly are you tracking with regard to how those products develop and come to market? Yeah. So I think from a product development perspective,

we're keeping a close eye on tokenization and what does that mean in terms of the ETF structure. But from a peer investing, like, what do I want allocation to? I do think, you know, the pendulum always swings. And we're keeping an eye on a lot of the reshoring products that are out there. You know, you're seeing kind of the old school infrastructure, industrial products that, you know, have not done as well over the years. But there's a big drive, you know, kind of away from globalization into this reshoring concept. And I think that has legs. I think there's reasons on policy front.

There's reasons on consumer front. why you would start to see that take shape. And it's kind of funny because you go full circle. Some of the names that you wouldn't think about when you start talking thematics, I think are actually going to start getting a lot of the conversation as we move into the next year and beyond. All right. And to close things out with you, Ryan, at GlobalX, you run a shop that puts a lot of kind of thought into these ETF products. What exactly is going to be that next thing for you guys?

top of mind for you on your radar, so to speak, with regard to what those next products could be. Oh, look, I would like to start where Mike ended there. Infrastructure is something that's near and dear to our heart based off of Pave, which is our largest ETF in the market currently. Tariffs have been an interesting one in terms of, in our view, haven't had a massive impact on the consumer thus far, but to the extent that they do, we think some of these reshoring efforts that you can get through some of these infrastructure plays is an interesting one, so that's one that I would say. You know, The other theme that we talk a lot about is electrification, right? The idea of all of the things that are going to be required for us to continue to support

this AI boom, the electrification of the U.S. economy is certainly one of them. So you can get that exposure through ZAP, ZAP, our ETF there as well. Now it's time to round out the conversation with some thoughtful analysis and perspective to help you better understand ETFs with our Markets 102 portion of the podcast. Mike Aikins of ETF Action continues with us now. Mike, I'd like to start where the conversation ended during the ETF Edge show that we just finished taping. And that is the next level or the next evolution of thematic investing and just where you think things are moving. Where do you see some of the most momentum coming for thematic type investing products?

Is it in certain asset classes, certain sectors, industries, certain parts of the market? What exactly does your universe tell you about where that demand could be? Yeah, I mean, I think it's ever, it's evergreen, right? So that's a great thing about investing. And I think it's probably why we both love our job so much is you really don't know what the day is going to bring. And we don't know what the next team is going to bring. But we have kind of an idea, right? There are hallmarks out there kind of guardrails saying, hey, this is what's kind of driving the market.

And I do think I talked a little bit earlier, but I do think there's going to be a drive back to some of your more traditional, low multiple sectors. but within those sectors, they're very broad, specific themes. You talk about reshoring what companies can benefit from the idea of bringing back reshoring. It's going to take time for that to play out. So it's an opportunity to get in early and play that out. I think AI is going to play a role throughout the marketplace. And Ryan did a great job on the previous segment, just talking about what does that mean in terms of, you know,

we're seeing utilities trading at multiples. We haven't seen in a long time. There's only one reason we can tie back to that. It's AI, right? So how is that going to play into the market, you know, this idea of clean energy? It's been a tough place to invest the last few years. But I think that has to be part of it. It's an all of the above concept uranium.

I think that's what's really compelling about the thematic marketplace is rather than just happen to go out and buy a single stock, you can buy kind of an allocation to that area and smartly designed. It gives you that opportunity set. So I don't think about it in terms of, you know, hey, I'm making a call. This is going to be the next big theme. I think themes play out over time. And if you're tracking the data, you can see those themes start to play out in the returns. And one of the great things that we talk about ETFs all the time with people, it's not just an investing tool. You guys at CNBC do an awesome job putting up tickers when you see moves in the market.

That's what ETFs represent. It's a way to for everybody to be able to research. search the market through the lens of ETFs. And I think thematics are just going to continue to play a big part of that. Not just that. It's an easy way for us in terms of business news and media to be able to kind of tell traders, investors, even anybody who wants to understand about what's happening in the market a way to quantify, right, just what kind of action is taking place because of a certain type of headline or theme that's developing in the marketplace right now. Because of that focus, Mike, I'm curious about what your thoughts are with regard to just how granular some of these retail traders and investors and investment managers will actually get with regard to thematic investing. You mentioned before that there are kind of these broader sectors, but then within those sectors, there's other themes that are developing on a more granular level.

It sure seems as though that kind of maybe takes away from some of the bigger picture thematic elements and gets way more nuanced about how you want to express those views. what's the kind of balance point for just how granular some of these traders or investors want to be? So that's a great, great question. And I think you can actually just look at the ETF market and answer that question, right? The ETF market just crossed over $13 trillion here in the U.S. Thematics, as we define it, there's 400 ETFs and about $260 billion. So that gives you an idea of what percentage of the overall market is in thematics. So what is that?

15% about, and I'm sorry, not even that. well under a percent of the assets there. We think that most of our clients and most of our clients are financial advisors that are using our tools to build model portfolios are thinking about thematics as kind of two ways. One, to get access to a theme early and quick through that lens of the ETFs to create a story for their clients, how they're differentiating from the market. But if you look at their overall model, these are sub 10% allocations. They still have their SPY.

They still have their IVV, their VOO as their anchor, their AGG, but then they're spreading in some of these themes, not just about returns and alpha generation, but also about telling a story about that client, right? So that's really the opportunity set of the thematic marketplace. So that tailored portfolio construction almost lends me to believe that for those folks out there who may not have the level of knowledge that an investment advisor does,

that it might behoove them to kind of look at, investment advisor, investing advisor, or some other kind of person in that role to help them navigate through this. The other point, I guess, that's interesting about that is you mentioned how quickly or how early some people want to get ahead of some of these themes or trends. In your experience looking at this market and looking at ETFs as they've developed, thematic or otherwise, over the last several years, just what types of characteristics do you think are the ones that traders, investors, and investment advisors look for to identify what those kind of early stage themes are that could become much bigger in the coming quarters or years?

Yeah, so that is a really hard question. You know, it's really difficult to know what the investor is going to latch on to. Part of it's just marketing and distribution. Bigger firms with bigger stories are going to, you know, bigger resources are going to have a better job kind of getting that story out there. But I definitely think it falls in line with kind of the idea of sentiment. The thing you have to be careful with with ETFs and any investment is you have to ask yourself by the time I'm hearing about it and the product came to market, how far has it ran? Right?

Because we all have the tendency to chase kind of the narrative and make sure to look under the hood to make sure that the big jump hasn't already happened or you want to, you know, layer into this investment opportunity. But part of the, I think, storyline for thematics and part of the overall ETF market, you asked earlier about innovation and product, I do think we're going to see more and more strategies come to market that are thematic rotation. My favorite part about themes is now that they've been around for over a decade, you know, there's all these different thematics. It's the ones that make it. There's a lot of closures and they'll continue to be a lot of closures, right? You don't get over that $50 million, $100 million market. good chance at some point it's going to get closed. But there are within all of these some that make it, they have that viability.

You can watch it as a way to invest in the market. One of our most popular reports that gets read by thousands of people every day is a simple report that says ETF most active. And we just break down volumes in ETFs because it's an instant narrative of what happened in the market that day. And I think that's one of the pieces of this story. As far as the retail investor goes, just depends on how much. much interest you want to put into this, right? You need to do your homework. And I think you do have to be careful with investing in themes that, you know, everybody's scared of taxes, but I'd rather pay taxes on a gain than, you know, offset, you know, some earnings with losses. So you do have to

be a little bit more tactical in this space, despite what everybody wants to say, hey, this is a long-term theme. We all know the market gets overbought and oversold, and that's an opportunity set. And that's one of the things that these thematics offer. All right, Mike, before we let you go, given the perch that you sit on, looking at the entire ETF universe that you do, what has you the most excited or the most cautious for 2026 with regard to ETFs? So most excited is I think just, it's gone mainstream. We're past mainstream. Folks understand the tax benefits, the ease of use. And it just really does, you know, it's cliche, but it does democratize the idea of investing. And that's what we want. We want

everybody to be participating in the long-term growth of our economy. of the world economy. From a cautious perspective, financial engineering of ETF products through the new ETF rule that went out a few years back is out of control. We're debating what to do with single stock, leverage inverse ETFs at this point.

On our database, we track them, we watch them. I don't think they're necessarily bad in the terms of, it's for most retail investors, and just real quick on that note, you know, if the ETF market is $13 trillion, we do a lot of data, of mining of 13Fs and understanding who owns what, about 65% of the entire ETF market can be tied back to 13F filings, right?

So that's 65% institutional use and probably a little more because there's some people that don't have to file. If you look at single stock ETFs, about 2% can be tied back to institutional investing. Right. So it's all retail. It's 100% being driven by retail. And I do think it's going to end with tears like it always does. Some people are going to win.

And we've seen a lot of outflows, even though the AUM's going up because people have been taking some profits. But it's a dangerous game. And tracking error is very real. These things are not long-term products. So from a cautious sentiment, I worry about continued financial engineering. All right. Interesting cautionary tale there for sure. Mike Akins over an ETF Action.

Thank you very much for the conversation. We appreciate to come back and see us again soon. Now, that does it for the ETF Edge podcast. Thanks for listening. Join us again next week or just head over to etfedge.cnbc.com. Over the last few decades, technology has transformed our world in amazing ways. Through it all, Invesco QQQEF has connected investors to the forefront of innovation. Access the future today with InvescoQQQ. Let's rethink possibility.

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