New ETF Platform Bets on Thematic Boom, Active ETF Growth

Tema ETFs, a New York-based ETF platform that aims to focus on thematic exchange-traded funds and actively managed vehicles, launched on Monday after “building in stealth” for a year, Founder and CEO Maurits Pot said on LinkedIn. 

“A lot of thematic issues focus on what's hot today, not what’s actually a long-term structural trend,” Pot told etf.com. 

In addition to active thematic ETF strategies, its goal is to also make it easier for institutions to create ETFs. 

“We believe the next decade of ETF market growth will be driven by active ETFs, that represent ~5% of global ETF assets today, but a growing double-digit share of global ETF flows," Pot noted. “We’ll be launching our own active ETFs focused on structural long-term themes without a listed US ETF today such as reshoring, luxury goods, and oncology.” 

Tema ETFs already filed to launch a pure-play oncology ETF, Pot told etf.com. 

According to the company website, these themes include “biotechnology, financial inclusion, environmental commodities, regulated monopolies, the Asian middle class and dominant consumer brands.” 

Index Ventures and Accel led the investment round, together with Zinal Growth. Fintech investor Jane Gladstone, founder of Aberdeen Asset Management Martin Gilbert and former co-CEO of Bridgewater Associates Jonathan Rubinstein also participated. 

The company plans to unveil a “proprietary turnkey ETF issuance infrastructure solution” later this year, which will enable existing asset managers to enter the ETF space. 

There are some high-profile investors behind the venture. 

The launch underscores recent investor interest in actively managed ETFs. So far this year, active ETFs make up 30% of total ETF flows, according to Bloomberg data. Tema ETFs sees this market segment has plenty of room for growth. 

“The active ETF asset class is half the age of its passive counterpart, yet it represented the majority of ETF launches over the past 18 months,” Tema ETFs said in a statement. “As of Q4-2022, global active equity ETF assets remain below $150 billion, versus over $20 trillion in active equity mutual fund assets: This comparison underscores how nascent the active ETF industry remains, despite its accelerating growth.” 

Since the first active ETF launched in 2008, the market segment has seen uneven growth. The level of investor interest this year even surprised the managers of the largest and most popular active ETF, the JPMorgan Equity Premium Income ETF (JEPI). It’s up 2.6% as of May 4. 

What Tema ETFs is aiming to do differently when it comes to thematic ETFs is manage the risk profile of its target industries and market segments. 

“None of the big [biotechnology] ETFs have performed well over a longer period of time because they don't identify or manage the risk inherent to the sector very well,” Pot noted, commenting on the biotechnology space. “For us, it starts with risk management. We believe there is value to having domain expertise in a certain sector when managing risk in a particular industry.” 

Contact Daria Solovieva at [email protected]