First Trust repurposes three UCITs ETFs to better display new thematics
First Trust has recently repurposed three of its European ETFs to better reflect the world’s demand for thematics based on disruptive technology.
The First Trust Indxx NextG UCITS ETF, NXTG LN, was formerly the Nasdaq AlphaEx Japan ETF, but is now expected to be composed of up to 100 securities issued by companies that have devoted, or have committed to devote, material resources to the research, development and application of fifth generation (5G) and next generation cellular technologies.
The firm writes that given the strong demand in the market for IOT devices connectivity, they believe that instead of tracking an index that provides exposure to Japan, tracking an index that provides exposure to companies that are involved in 5G technology will make the Fund more marketable. The base currency of the fund will change from Yen to USD.
The First Trust Nasdaq Clean Edge Green Energy UCITS ETF, QCLN, has emerged from the Nasdaq AlphaDEX Small Cap Core Index and will now track an index that provides exposure to clean energy companies that are engaged in manufacturing, development, distribution and/or installation of clean energy technologies.
The firm writes that given the strong demand in the market for clean energy technologies exposure, the Manager believes that instead of tracking an index that provides exposure to US small cap core companies, tracking an index that provides exposure to companies that are involved in clean energy technologies should make the fund more marketable.
Finally, the First Trust Dow Jones International Internet UCITS ETF, FTSZ, formerly the Nasdaq AlphaDEX Switzerland Index is now designed to track an index that provides exposure to 40 of the largest and most actively traded non-US international companies that are engaged in internet commerce and internet services.
In addition, the base currency of the Fund will change from CHF to USD. First Trust writes that it believes that a more specific investment policy aimed at companies that are engaged in the exponential growth of internet services and internet commerce would better position the fund for growth.
Gregg Guerin (pictured), Senior Product Specialist at First Trust comments that the firm is building up its thematic offerings because clients want exposure to themes. “Thematic investments make investors lives better,” he says.
He comments that thematics have always been at the core of the First Trust business. “This is the bedrock of how we grow and potentially the basis of the next industrial revolution,” he says.
The UCITs business for First Trust has grown significantly over the year. At February 26th 2020, there was USD704 million in the UCITs business, and their cloud computing product was at USD52 million. Now, at the beginning of March, the UCITs business was at USD1.354 billion with USD606 million in the cloud computing fund, putting it in the top spot, having beaten the S&P 500 by almost 40 per cent, with a 2020 return of 57.6 per cent.
In the US, First Trust has a wide range of thematic ETFs, so these repurposed ETFs better reflect what the firm offers and what their audience wants, he says.
“As an asset manager, thematic investing provides tools to the investment professionals to better express their investment beliefs. The US demand for thematic equities is moving faster historically, with our US version of the NXTG ETF up from USD14m million two years ago to USD946 million now.”
Guerin comments that 5G will allow the streaming of Netflix or YouTube that has been seen during the pandemic and predicts that USD1 trillion of revenue could go into the cloud worldwide by 2025.