New ETF Tracks Thematic Winners

Amplify ETFs’ newest launch aims to give investors a touch of exposure to the stocks most held by popular thematic ETFs.

The Amplify Thematic All-Stars ETF (MVPS) launched on the NYSE Arca Wednesday morning, sporting an expense ratio of 0.49%. It tracks the ETF All-Stars Thematic Composite Index, which follows the most widely held companies in the most popular thematic funds.

Those thematic ETFs are centered around companies focused on disruptive technology and health care breakthroughs, financial technology, sustainability, changing consumer focus and changes to the industrial world.

The underlying index is heavily weighted toward American large cap information technology stocks, and includes major tech companies like Tesla, Nvidia, Square, Amazon and Google parent company Alphabet among its top five holdings.

(Use our stock finder tool to find an ETF’s allocation to a certain stock.)

Amplify CEO Christian Magoon told ETF.com that the fund reconstitutes monthly based on changes in top holdings, essentially tying it closer to what the market believes will perform compared with the strategies of an active manager.

“We've seen people try to crowdsource social media sentiment, and there are certainly a lot of reasons somebody might … engage in certain content,” he said. “But for the most part, we know that invested dollars in ETFs are a big indicator of what people think about those ETFs and also kind of the underlying stocks that are most commonly held.”

While the index has produced returns of 32% over the past three years and outperformed the SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust (QQQ) in that time period, it has posted just 1.3% in returns year-to-date compared to the SPY’s 14.7% and QQQ’s 13.5%, according to data from Bloomberg.

Magoon said MVPS isn’t designed to chase absolute returns like other funds focused on disruptive technology and similar themes. Instead, he views it as a core for investors to build their thematic holdings around.

“If you’re lights out trying to create the most alpha at thematic investing, MVPS wouldn't be the ideal product for you, because you’d probably want to guess which one of the 50 themes each year are the best to own,” he said.

MVPS’ closest rival is the Goldman Sachs Innovate Equity ETF (GINN), which follows a different index targeting the same broad themes are in the index tracked by MVPS. The two funds also have the same expense ratio.

The Global X Thematic Growth ETF (GXTG) has a similar strategy in targeting high growth sectors but operates as a fund of funds composed mainly of the firm’s own thematic ETFs.

Contact Dan Mika at [email protected], and follow him on Twitter