Global X Europe’s Delledonne hints at launches planned for 2021
December 2020 brought news that the US’s thematic ETF specialists, Global X, with assets in early February standing at USD26.3 billion, was to launch a European office.
Director of Research for Global X ETFs in Europe is an ETF veteran, Morgane Delledonne (pictured), and she says that Global X’s European office has a very ambitious plan for the year ahead.
The December launch into Europe was accompanied by two new products for the European market, the Global X Video Games & Esports UCITS ETF (HERU) and the Global X Telemedicine & Digital Health UCITS ETF (EDOC), listed on the London Stock Exchange.
The firm has 25 thematic ETFs in the US. Its first was the Lithium & battery technology ETF, launched in 2010 and since then the firm has sought to stay on the competitive edge through investing in disruptive technologies such as artificial intelligence, cloud computing and robotics.
Delledonne says that for European investors the firm will take into account the increased demand for ESG products, which is noticeably bigger in Europe over the US. “We have sustainably-themed ETFs in the US and these themes will resonate with European investors,” she says.
Clean technology ETFs have seen huge inflows in the ETF industry generally, she notes, plus cyber security. “Cyber security is timely because of remote working during the pandemic, and is related to the usage of cloud computing. It will be a key priority in both the private and the public space in a trend that is likely to accelerate in the coming years,” she says.
The difference between Global X and other thematic ETF providers, Delledonne believes, is that the firm focuses on providing pure-play exposure to specific themes, targeting companies that derive 50 per cent or more of their revenue or assets from a specific theme.
Global X market-cap weights its funds to provide more exposure to companies as they reach new levels of success, while cutting exposure to companies as they struggle or fail.
“We differ from other providers in that we continuously monitor the next theme that will disrupt the global economy,” Delledonne says, and the firm has a team of 10 analysts who examine the investability of a theme. “All thematic ETFs are not the same, even though the title is the same.”
“We have to meet a certain threshold before we can offer a product based on a theme,” she says. “We want to be as early as possible but not too early as you will be associated with lots of volatility and too small a portfolio. We want to find this middle ground where the theme has been adopted by a few.”
Delledonne believes that thematic ETFs can be used as a hedge. “They can hedge against the materialisation of the transition of the current industrial economy to a more digital economy,” she says. “It makes sense and is relatable to everyday life.”