Thematic ETFs (are Terrible Investments)

Heres the thing though, its rational to invest in **profitable** clean energy companies as part of your portfolio due to the carbon bubble theory. If you don't invest in the alternative energy future, then you will be left holding the bag for the eventual, and inevitable, decline of fossil fuel based industries, due to ever increasing political pressure to change the energy grid.

I believe that investors not knowing about these pricing models or not believing in them based on "this time is different" could be the most important factor for unsophisticated investors.
I mean before these videos I was completely unaware that there was something like factors for stocks. Of course in hindsight it seems extremely logical, but beforehand I probably wouldn't have thought of it as risk factors.

I am tempted by AI ETFs but this video makes me not buy them 😅

All my thematic ETFs have turned to 💩💩💩

Ben, what is your opinion on SVXY? Feels more like selling insurance and not so exciting... :)

I’m a new investor and this was more confusing than I thought it would be 😂 so yes to VOO/VTI/VXUS and no to QQQ/VGT/VUG/SCHD?? Lol

Now (2023) we have the AI hype.

What about thematic ETF like XUT which focuses on Utilities?

Now that we are in a new hype cycle with a new technology unlocking massive returns, this video is once again incredibly relevant

The more I learn, the less I know. Your knowledge humbled me 🙏

Do you consider sector ETFs such as XLE (energy ETF), XBI (biotech ETF), and XAR (war ETF) to fall under what you discussed in this video or not?

So excluding those "hype sectors" should increase returns right?

Soo buy cannabis stocks?

Short thematic ETFs. 😁😂

Why <insert anything that’s not low cost index funds> is probably a terrible idea
— Ben Felix, PWL Capital

What do you think about TEC

I know u like small cap value ETF/Index. What is your opinion on magic formula investing from Joel Greenblatt. In a way it is small value investing with low pe and high ROIC. It should do well like small cap value?

What about a fund that is market x-thematic ? Thereby allowing theme fund managers to ironically identify the overoptimism driven poor stocks to best avoid.

What about not "clean energy" which is crazy vague for a "theme", but deep geothermal in particular. Hear my logic... either deep geothermal will be wildly successful far beyond most people's imagination, or we're doomed anyway because it appears less and less likely that hydrogen fusion will ever work. Okay, this is just an example - I'm just searching for perhaps the "exception that proves your rule" generally.

Would you say it is less risky to try stock picking clean energy stocks on your own, instead of buying a clean energy etf ?

I was going to buy some cyber security ETF. Then I remembered this video. Thanks Ben!

Vc que é o Otávio Paranhos canadense?

I have only BOTZ and ICLN thematic, and then all thematic ETF are Bad??? In long term also?? Many politic proyects has those sector on Big plans.

Hi, keep up the great and meaningful work! Subscriber from Greece. Would you consider ESG ETFs in this category? Mostly their content is from banking/insurance sector and there is not such a hype around it, but is it a good idea afterall?

Needed this video!! Thanks Ben

The funny thing is that during the bull market everybody was saying that investing in thematic ETFs for the long term was a good idea. Now, in the bear market, everybody's saying it's the worst idea ever 😄😄

"Collective excitement of investors tends to drive up stock prices"

checks own portfolio: blockchain etfs down 85% YTD.

Nope, I'm safe.

I know your videos enough to know you’re going to trash this kind of thing. IMO any kind of thematic ETF should be held as long as it’s in an uptrend, but sold if it turns.

To be fair, thematic ETFs is a much less crazy version of stock picking, as it allows people to closet index whilst speculating to their heart's content.

As a HF quant researcher, I must say I love your paper selection- best authors, very on point. You do a great job summarizing key points clearly.
Do you do any quant alpha research yourself btw at PWL?

While a few papers can support any argument, you lost me at tech stocks and clean energy stocks being bad.

The funny thing is an S+P fund is a theme. Every index is thematic. Kinda silly to not make a distinction!

And ESG ETFs/funds... would you include them in this category?

Meta verse is another terrible investment

so if your down big on arkk. what do you suggest? it already dropped 70%, is the bubble popped? cash in the loss? it would take ages for sp500 to recover that loss. or keep it in for a rebound?

Ben what are your thoughts on the recent comments from Elon and Cathie, about all the passive investing, and their reference to Jack Bogle?

Really appreciate your work Ben. Thank you!

Ben, how about a comparison between Vanguard stock index ETFs and DFA stock ETFs such as DFAU, DFAI and DFAE

I love how Ben had to hold his laugh in a few times during this episode. The financial world can be really funny at times.

Just a video idea, but I would love to see a video on Covered Call ETFs and/or Income Funds. I know you’ve touched base on financial products with downside protection before (I.e. low volatility ETFs) but given CC ETFs unique characteristics could be interesting.

Overall I get the take-home message. However there are a lot of sweeping generalizations in this video. It paints all thematic ETFs with a broad brush, and does not even define or set thresholds on what exactly a thematic ETF is. It also doesn't take into account the fact that some retail investors may have subject matter expertise on a given sector, and therefore have a clearer perspective on that sector's trajectory than generalist fund managers. Further, it ignores the fact that certain investors might have an ethical code of conduct that inhibits their willingness to invest in certain index funds, and which could mean they have portfolio objectives that go beyond strictly maximizing gains (though it's safe to assume that maximizing gains is the goal of a vast majority of investors). Lastly, there's a disproportionate focus on new thematic ETFs, and Ben ignores the fact hat many of them have been around for a decade or more, and have a proven track record of responsible management and growth.

Ben, I would love to hear your thoughts on how to position portfolios for 2022 specifically in regards to the fixed income side. Many of us are near or in retirement and our “safe” assets are acting like anything but!

But ARKK is at 95% 5Y returns vs 65% for the S&P500

I'm still in awe at the things you teach. Would have had no idea about any of this if not for you.

added to my favourite video. Thank to @Mr RIP to land me here.

In other words, stick with an s&p 500 index fund. Boring, but reliable in the long term.

Ben, i'm curious if you use any software? If so what's your go to?

Thanks for the video! Could please make the charts/graphs full screen and not just a tiny thumbnail? Cannot see anything on the mobile devices.

I've just found this channel, but it's really brilliant, thank you for producing these!

Hi Ben
Thanks for a great content as always. What are your thoughts on XBAL ETF as the only fund in a retirement portfolio given a poor performance of bonds in the last year ?