This is the final Spy column of the year and Spy and the FSA team wish all our readers a very Merry Christmas and Prosperous New Year ahead. May your season be filled with sparkling champagne, single malt whisky, aged rum, craft beer, vintage wine and much joy. Over a glass or two, Spy has been contemplating 2024. The oft quoted and possibly misattributed Chinese proverb, “May you live in interesting times”, springs to mind. In the asset management world, our dynamic and ever-changing industry has had another banner year. There are many ways to tell the tale, but for Spy, the most interesting perspective, is some of the strategies that came to market – which, in their own fashion, reveal our passions, hopes and fears.
January. The first month of the year saw the launch of the Range Nuclear Renaissance Index ETF. In Europe, paranoia over sky-high energy prices led to furious policy debates over green energy and even whether nuclear fits the bill. Investors seemed to be betting that no matter the rhetoric, nuclear was coming back in the United States, Europe and elsewhere.
February. The blistering success of just a handful of stocks: Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla, dubbed the ‘magnificent seven’ by industry commentators and fund managers was by now leaking out of financial circles and into the far wider popular consciousness. No shock really when the Seven Roundhill Daily 2x Long Magnificent Seven ETF debuted. Believers could, using a poker phrase, “go all in.”
March. Large caps had made so much of the running and the magnificent seven had so much of the attention, several managers started to wonder if the tide would turn to underperforming parts of the marker. Spy was happy to see funds such as the Neuberger Berman Small-Mid Cap ETF come to market. If we are not nurturing the companies of tomorrow – we won’t be in a pretty place.
April. Thematic tech has been popular for years. April saw the launch of the Themes’ Robotics & Automation ETF. The belief (or dream or fear) that we shall one day have Star Wars-like drones helping us, continues to drive quixotic innovation.
May. After years of pressure, the SEC finally relented and allowed an American Bitcoin ETF to trade on the main market instead of the clunky OTC venues. iShares Bitcoin Trust listed, among others, and has grown rapidly, as has the price of the token itself.
June. Despite the hopes of many that the rest of the market might get a look in, the launch of the BlackRock Large Cap Growth ETF tells its own story. Large caps were still dominating flows and performance by the halfway mark, with hardly another game in town.
July. Geopolitics continued to dominate so much discourse. Terms like near-shoring, friend-shoring, re-shoring were by now common currency. Investors hoping to cash in on the trend were given funds such as the iShares US Manufacturing ETF which captured an inflection point as globalisation soured and went into retreat.
August. We live in a data driven world and AI is all the rage. Dozens of funds hoping to benefit from the trend have launched, and even in the slowest summer month of all, the Xtrackers Artificial Intelligence and Big Data ETF arrives hoping to garner attention in a crowded field.
September. Electric vehicles are by now firmly EVs and investors hoping to capture value in the industry are looking beyond big car brand names such Tesla and BYD to their supply chains. The Themes Lithium & Battery Metal Miners ETF arrives to fill a gap.
October. Concerns about mega-cap, mag-7 dominance abound with portfolio managers and fund managers alike getting skittish. The Defiance Large Cap ex-Mag 7 ETF debuts, giving investors a chance to avoid the out-performing stocks.
November. China’s economic woes and geopolitical wrangles lead to more exclusionary thinking. The Dimensional Emerging Markets ex China Core Equity ETF is, rightly or wrongly, symptomatic of this viewpoint giving investors an easy way to avoid the Middle Kingdom.
December. And so, we reach the end of the year. What strategy just listed? Sadly, yet another fund that speaks to our unstable world: the Pacer Solactive Whitney Future of Warfare ETF. If Spy can take any solace from this particular launch, it is that often thematics arrive at the point of inflection and one can but hope 2025 will in fact, be far quieter than 2024.
Spy’s quote of the week is anonymous, “The long-term means ‘a period in which even if you’re right, your investors have left already.’” Ouch.
Until next year…
