Shipping, silver and sector plays dominate ETF markets in May

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As worldwide ETF assets surged to a new record high of USD8.8 trillion in May, global ETF analysis platform Trackinsight has released analysis of the key ETF investment trends and asset flows.

May was the 21st consecutive month of positive ETF flows in the North American region and the 14th consecutive month of positive flows for European-listed ETFs. European investors have added nearly USD96 billion in new assets since the start of the year, leading to a new total of USD1.5 trillion in AuM across the region. In contrast, North American ETFs have benefited from USD413 billion of new flows year-to-date, pushing them to a new high of USD6.6 trillion in AuM.

Spooked by ongoing volatility and increasingly hostile rhetoric from politicians and regulators, investors sold USD150 million of bitcoin ETFs – the first month of negative flows since June 2020. Negative flows, coupled with price crashes in bitcoin have seen assets in this nascent sector shrink from USD6.6 billion in AuM in May to just USD4.1 billion in June.

In contrast, as the threat of rising inflation looms, investors have migrated to traditional store-of-value products such as gold. Gold ETFs reversed three months of negative flows to pick up USD3.3 billion of new assets over May. Silver ETFs have also benefited from positive flows, with USD515 million of new assets added in May. Assets in Silver ETFs now stand at an all-time record of USD27 billion.  

While clean energy funds were some of the top performers of 2020, traditional energy products have been dominating this year. Of the top 10 best performing ETFs in the world, eight target the Oil and Gas sectors and all have delivered more than 50 per cent year-to-date.

However, as shipping container availability remains stretched, the cost of shipping goods has skyrocketed, driving the Breakwave Dry Bulk Shipping ETF up 192 per cent year-to-date. The fund has seen modest flows of USD38 million year-to-date indicating many investors may be unaware of this opportunity.  

Anaelle Ubaldino, Head of ETF Research and Investment Advisory at Trackinsight, says: “Our data shows investors sold their positions in Bitcoin ETFs in May as the cryptocurrency price crashed. At the same time, famous voices took to social media to draw our attention to the huge energy requirements of Bitcoin mining, sharing concerns over its potential impact on the environment.

"Interestingly, Energy has been the best performing sector so far in 2021. Energy ETFs recorded a strong month in May as Oil reached a new one-year high. Traditional energy production still relies on fossil fuels and while Clean Energy ETFs offer investors an obvious alternative, some commentators are arguing that Bitcoin could also be helping to reduce our CO2 emissions.

"In their quest for cheap energy, cryptocurrency miners started setting up their operations in tandem with traditional oil producers, drawing power from their unwanted by-product emissions. This allows Bitcoin to be mined for cheap and at relatively low-emission levels. It also helps nudge large international oil companies in the direction of a more sustainable future as they slowly wake up to this profitable opportunity. If electric cars are considered ESG-friendly, why isn’t bitcoin?”