Resolution to Lower ETF Fees in 2024?

Themes ETFs has recently launched 11 new funds, with expense ratios 40% cheaper than the average charged by competitors.

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As we look to the new year ahead, resolutions abound; many investors have resolved to lower their fund fees.  While there are many uncertainties in the market, the impact of high fees upon investment returns remains a mathematical certainty.  All else equal, funds with higher fees pose a greater drag on portfolio performance; the higher the fee, the greater the magnitude of the drag.  

This is where we hope to help.  Themes ETFs is a brand new issuer, and we have recently launched 11 new thematic and fundamental funds with expense ratios 40% and 30% below the thematic and fundamental category averages, respectively, as calculated by etf.com.1

We are led by Jose Gonzalez-Navarro, who previously cofounded Global X ETFs in 2008.  We have a team of dynamic portfolio management professionals who collectively bring decades of prior experience and extensive expertise managing ETF portfolios for multibillion-dollar asset managers.  

The ETFs at Themes seek to provide investors with a way to own the opportunities that are shaping the future and moving markets.  Our lineup spans a wide breadth of index-tracking investment exposures, including funds with a focus on cutting-edge technologies like artificial intelligence and cybersecurity, fundamental factors like high free cash flow and natural monopolies, hard assets like gold miners, as well as traditional industries like airlines and European luxury.

We believe the current market environment presents a unique opportunity for each of these thematic investment exposures.  When central banks began tightening monetary policy in 2022, they ushered in a tale of two markets.  In this environment, not all stocks and not all sectors are created equal.  By reintroducing gravity into the investment equation in the form of higher interest rates, returns were no longer aided by the zero gravity conditions of zero percent interest rates.  In order to succeed in this environment, investment strategies will need to overcome this higher gravity to achieve escape velocity.  

While the Federal Reserve has signaled that it has reached its terminal interest rate, investors would do well to remember that the effects of monetary policy often operate on a lag and that interest rates will likely not return to zero anytime soon.  In short, the days of easy monetary policy are likely well behind us; the days of normalized monetary policy appear here to stay.

One of the most emblematic examples that illustrates this tale of two markets paradigm was the divergent impact of rapidly rising interest rates upon the banking industry, which culminated in the banking crisis of March 2023.  During this crisis, smaller regional banks like Silicon Valley Bank, Signature Bank, and First Republic Bank all collapsed.  

Meanwhile, large banks not only remained solvent in general, but some brokered bailouts or acquired the assets of these smaller regional banks, leading to further consolidation in the industry.  Here, it was clear that targeted exposure to larger banks ultimately fared better relative to exposure to both smaller regional banks and the banking industry as a whole.

Many of these large banks are also classified as global systemically important banks (GSIBs) by the Financial Stability Board.  These 28 publicly-traded banks2 form the cornerstone of the global financial system and must conform to stringent regulatory requirements.  At Themes ETFs, we created our Global Systemically Important Banks ETF (GSIB), to provide targeted exposure to these 28 banks, one of the first actively-managed ETFs of its kind to do so.

In short, the current market environment has no shortage of obstacles.  Investors may face many more challenges now than in years past.  However, with obstacles come opportunities.  Investment strategies that offer targeted exposure to specific segments of the market with relatively lower fees may provide the potential needed to overcome the new gravity in this environment.  At Themes ETFs, we seek to own these opportunities through our lower-cost funds.3

Footnotes:  

1Source: etf.com/topics/theme-investing, Universe of 321 Theme Investing ETFs; etf.com/topics/fundamental, Universe of 172 Fundamental ETFs, as of 31 December 2023

2Of the 29 global systemically important banks (G-SIBs) identified by the Financial Stability Board, 28 are publicly-traded, which comprise the holdings of the Themes Global Systemically Important Banks ETF (GSIB).  (Source: Financial Stability Board, Basel Committee on Banking Supervision, Themes ETFs as of 31 December 2023)

3Themes ETFs seek to provide investors with a way to own the opportunities that are shaping the future and moving markets, with expense ratios 40% cheaper than the average charged by our competitors. (Source: etf.com, Universe of 321 Theme Investing ETFs, as of 31 December 2023)

Access Important Risk Disclosures and Learn More at: ThemesETFs.com

Carefully consider the funds’ investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the funds’ summary or full prospectus, which may be obtained by calling 1-866-5Themes (1-866-584-3637) or by visiting ThemesETFs.com. Please read the prospectus carefully before investing.

Investing involves risk, including the possible loss of principal. In addition to the normal risks associated with investing, international investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. Narrowly focused investments and investments focusing on a single country may be subject to higher volatility.

Technology-themed investments may be subject to rapid changes in technology, intense competition, rapid obsolescence of products and services, loss of intellectual property protections, evolving industry standards and frequent new product productions, and changes in business cycles and government regulation.

Banks are especially subject to the adverse effects of economic recession, currency exchange rates, government regulation, decreases in the availability of capital, volatile interest rates, portfolio concentrations in geographic markets and in commercial and residential real estate loans, as well as competition from new entrants. In addition, banks are subject to extensive regulation at both the federal and state level, which may affect permissible activities, profitability and the amount of capital that they must maintain. GSIB is non-diversified.

Themes Management Company LLC serves as an adviser to the Themes ETFs Trust. The funds are distributed by ALPS Distributors, Inc (1290 Broadway, Suite 1000, Denver, Colorado 80203). Solactive and STOXX have been licensed by Solactive AG and ISS STOXX, respectively, for use by Themes Management Company LLC. Themes ETFs are not sponsored, endorsed, issued, sold, or promoted by these entities, nor do these entities make any representations regarding the advisability of investing in the Themes ETFs. Neither ALPS Distributors, Inc, Themes Management Company LLC nor Themes ETFs are affiliated with these entities. 

Themes ETFs is a new issuer that seeks to provide investors with a way to own the opportunities that are shaping the future and moving markets, with expense ratios 40% cheaper than the average charged by its competitors.  The company is led by Jose Gonzalez-Navarro, who previously cofounded Global X ETFs in 2008.

From airlines to artificial intelligence, Themes ETFs offer targeted exposures spanning both cutting-edge technologies and traditional industries.