Global X, which was founded in the midst of the 2008 financial crisis and launched its first international ETF in 2009, has turned into a thematic and alternative-income ETFs powerhouse. With $27 billion in total assets and nearly 80 unique exchange traded funds, the company has remained steadfastly true to its goal of offering some of the best ETFs.
The New York-based firm continues to build out its ETF platform and has even ventured beyond U.S. borders recently. In 2020, it opened its Japan and European businesses, launching its first four ETF products listed on the local exchanges.
In addition to 25 thematic growth and 20 income-focused funds, Global X also offers 23 international, four commodities, five core and two alpha funds.
Best Funds Last Year Were Those That Benefited From Work-From-Home Theme
The best funds last year were those that benefited from the work-from-home theme, alternative energy, as well as China growth.
Global X Lithium and Battery Tech (LIT) had nearly $800 million in inflow in 2020 and surged 127.85% on the year. The $3 billion fund invests in the full lithium production cycle. That includes mining, refining and battery production. Top holdings include Albermarle (ALB), Samsung, Tesla (TSLA), Panasonic (PCRFY) and LG Chem. Tesla is on IBD Leaderboard and Big Cap 20 lists.
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Columbia Fund Wins With A Daring Focused Approach
Best ETFs And Mutual Funds Gain As Small Caps Continue To Shine
Six-Month Mutual Fund Leaders
Mutual Fund Category Performance
List Of Best ETFs Of 2021
Global X Telemedicine and Digital Health (EDOC) saw $865 million inflow in the five months since its launch in July 2020. The fund soared 26% in the trailing three months through Jan. 31. It’s benefited from the online demand for health services and companies that facilitate those. Top holdings include Illumina (ILMN), Teladoc Health (TDOC), Veeva Systems (VEEV) and Invitae (NVTA).
Other best ETF performers were Global X MSCI China Consumer Discretionary (CHIQ), Global X Video Games & Esports (HERO) and Global X Social Media (SOCL). All three were up between 78% and 93% in 2020.
Jacobs On Thematic Investing And Outlook For 2021
IBD spoke with Jay Jacobs, head of research and strategy at Global X, who’s spearheaded the firm’s unique research vision since joining in 2013. Jacobs provided insights into the firm’s best ETFs. Also thematic investing for the long haul, the role of Bitcoin and his outlook for 2021.
IBD: What is the mission of your company and how has it evolved over time?
Jay Jacobs: Our mission is to empower investors with unexplored and intelligent solutions, which we support with our range of targeted ETFs. Particularly within our Thematic Growth, Income, and International Access families. We’ve also provided thorough research and insights on our ETFs and the broader markets, and offer differentiated model portfolios that exemplify how to implement our strategies in a broader portfolio.
IBD: What differentiates you from other ETF issuers?
Jacobs: Our tagline is “Beyond Ordinary ETFs” and this is certainly true across our business. We offer nearly 80 ETFs and they all tend to provide a unique outcome to investors. Whether that’s enhancing one’s portfolio growth prospects through thematic, elevating the yield of one’s portfolio through our alternative income strategies, or gaining targeted exposure to certain geographies through our international funds. Beyond that, we provide exceptional support for our products with consistent research content and model portfolios that show how to use them.
New Global X Funds
IBD: Which new funds have you launched in the past year and how have they done?
Jacobs: In 2020 we launched 11 funds, which have seen strong starts despite being relatively new to the market. In particular, our telemedicine and cleantech themes have resonated in this environment where patients and medical providers are seeking to get care in the safety of their own homes. In addition, under the Biden Administration there are substantial tailwinds for investment in clean technologies, as he has rejoined the Paris Agreement and set aggressive goals for carbon neutrality by 2050.
IBD: Which funds saw the most inflows last year? Which ones were the best performers?
Jacobs: Several funds in our thematic suite saw significant inflows as investors recognized these ETFs are precise tools for gaining exposure to high growth areas of the market. EDOC and HERO both directly benefited from the stay-at-home and reopening economy as at-home activities increased. The postelection regulatory environment supported funds in infrastructure and clean energy like LIT and U.S. Infrastructure Development ETF (PAVE). Both of these areas’ chances of greater fiscal support have increased.
Which Best ETFs Are Facing Secular Shifts?
IBD: What do you see as secular shifts? And how do you plan on addressing those with your products?
Jacobs: Our products have largely been ahead of the secular shifts that occurred during the pandemic. During the stay-at-home economy, which accelerated the shift to digitalization in areas like cloud computing, e-commerce, and video games and esports, our products were exceptionally well-positioned to capture these changes. And while we saw the pandemic accelerate this shift, we continue to see widespread digitalization as a secular theme that will continue to grow beyond Covid-19.
IBD: What do you think of Bitcoin? And would you consider launching a fund for that?
Jacobs: Blockchain as a technology has been on our radar for years.
When selecting a theme for an ETF structure, we ask ourselves three questions. Do we have a high conviction behind this theme: Is it going to play out the way we expect it to? Is it investable: Can we get really targeted pure-play exposure to the companies that will benefit from this theme? And, is it going to play out over the long term: Will it occur over just a few years or over decades?
Investing In Blockchain Technology Has 3 Conditions
Blockchain has historically hit two out of the three conditions. It hit conviction. We believe the technology is very disruptive for financial services and beyond. And it hit on time horizon. It’s going to take a fair amount of time for that technology to be adopted and implemented across the global economy. And that’s a good thing, as we want it to be structural and to happen steadily over time.
But the challenge historically has been the investability aspect. Unfortunately, a lot of the blockchain companies are not generating much revenue from blockchain. Or it’s a very small part of their business operations.
But to be fair, that is changing fairly quickly because of the SPAC phenomena, direct listings, and high valuations in the equity markets accelerating the IPO timeline for a lot of companies. Beyond blockchain, the recent acceleration in IPOs means we are starting to see some early-stage themes that have previously failed on investability start to become much more investable. And that’s generally a very good thing for long-term thematic investors like ourselves.
Best ETFs For 2021
IBD: What areas of the market do you expect to do well this year?
Jacobs: We believe the reopening economy creates substantial uncertainty in our day-to-day lives. Are we going to the office or working from home? Are we taking our kids to school or doing distance learning? When are we getting our vaccine? This uncertainty positions companies well that are helping to facilitate safety and flexibility. This includes themes in health care like genomics, which is driving vaccine development and widespread testing, and telemedicine and digital health. And that is helping to facilitate medical services amid the pandemic. It also includes themes in technology like the Internet of Things, which is increasingly being used for contact tracing and recognizing potential Covid-19 symptoms. And cloud computing, which is enabling the continued hybrid work-from-home and distance learning environment.
IBD: What is your economic outlook for the next 12-24 months?
Jacobs: Broadly we see high valuations justified by low interest rates and historic levels of monetary and fiscal stimulus. However, we believe lower valuations and better pandemic-response in some overseas markets exhibit attractive qualities. Such as those in the Asia region. We expect that the reopening economy will continue to be uneven and nonlinear. In other words, we will sometimes be making progress and other times taking steps backward. This uncertainty will continue to reward the companies that grew amid the pandemic as they provided valuable solutions amid severe uncertainty.
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