The ETF industry has been seeing explosive growth, courtesy of its unique strategies, creativity, transparency, diversification benefits, enhanced tax competencies, low turnover and of course, low cost.

As such, several ETFs have shown accelerated growth, with AUM rising more than 1,000% so far this year. While established ETFs like Vanguard S&P 500 ETF (VOO) and Vanguard Total Stock Market Index Fund ETF (VTI) continue to attract significant inflows due to their liquidity and low costs, there is a new breed of ETFs flying under the radar. A small fund with a lower level of AUM has seen a bigger percentage increase in its assets.

Some of the fastest-growing ETFs of this year are GraniteShares 1.5x Long NVDA Daily ETF NVDL, Wisdomtree Artificial Intelligence and Innovation Fund WTAI, NEOS S&P 500 High Income ETF SPYI, Putnam Sustainable Leaders ETF PLDR and Valkyrie Bitcoin Miners ETF WGMI, per etf.com.

Inside the Growth

Artificial intelligence (AI) craze and the demand for single-stock ETFs drove the interest in the ETF industry this year.

With the advancement of technology and data analytics, artificial intelligence (AI) is making its way into the world of ETFs. AI-driven ETFs utilize sophisticated algorithms to assess market trends, predict asset price movements and optimize portfolio composition dynamically. This trend empowers investors with cutting-edge strategies that leverage the power of machine learning and big data.

Meanwhile, single-stock ETFs, also known as “thematic ETFs,” have been gaining immense popularity this year. Unlike traditional ETFs, which typically track a broad index or sector, single-stock ETFs provide exposure to the performance of one specific company by using derivatives. This allows investors to gain exposure to a particular stock without having to buy the stock directly. These ETFs offer investors a chance to capitalize on the growth potential of individual stocks while still benefiting from the diversification and liquidity advantages of ETFs.

There are currently 29 leveraged and inverse US single-stock ETFs on the market with a combined $1.3 billion in assets, according to data from FactSet. Five firms, AXS, Direxion, YieldMax, GraniteShares and Innovator ETFs, provide all the single-stock ETFs currently available on the market.

Actively managed ETFs have also seen a surge in interest this year in response to the extreme volatility in the stock market. most probably triggered by Fed policy and global growth concerns. The growing adoption of actively managed ETFs was the result of major active mutual fund providers entering the ETF fray by converting or cloning existing mutual fund strategies or adding new strategies. Actively managed ETFs do not seek to simply replicate the performance of a specific index. Instead, they are managed by a team of investment professionals who actively make decisions on what assets to buy or sell within the fund, with the goal of outperforming a benchmark index, especially in illiquid or inefficient markets or even if the odds are against it.

Let’s delve into the fastest-growing ETFs of 2023:

GraniteShares 1.5x Long NVDA Daily ETF (NVDL) – AUM Growth 30308%

GraniteShares 1.5x Long NVDA Daily ETF magnifies exposure to a single trade, seeking 1.5 times (150%) the daily percentage change of the common stock of NVIDIA. It has an expense ratio of 1.15% and trades in a volume of 274,000 shares a day on average. GraniteShares 1.5x Long NVDA Daily ETF has amassed $172.5 million in its asset base.

WisdomTree Artificial Intelligence and Innovation Fund (WTAI) – AUM Growth 20419%

WisdomTree Artificial Intelligence and Innovation Fund provides exposure to companies offering AI technologies and contributing to the development and deployment of AI innovations. It follows the WisdomTree Artificial Intelligence & Innovation Index, which identifies companies that are primarily involved in the investment theme of AI and Innovation. WisdomTree Artificial Intelligence and Innovation Fund holds 77 stocks in its basket, with each accounting for less than 2.7% of assets.

WisdomTree Artificial Intelligence and Innovation Fund has amassed $149 million in its asset base and charges 45 bps in annual fees. It trades in average daily volume of 278,000 shares.

NEOS S&P 500 High Income ETF (SPYI) – AUM Growth 9606%

NEOS S&P 500 High Income ETF is an actively managed fund that seeks to distribute high monthly income generated from investing in the constituents of the S&P 500 Index and implementing a data-driven call option strategy.

NEOS S&P 500 High Income ETF has AUM of $183.3 million in its asset base while charging 0.68% in annual fees. It trades in an average daily volume of 123,000 shares.

Putnam Sustainable Leaders ETF (PLDR) – AUM Growth 6024%

Putnam Sustainable Leaders ETF is an actively managed ETF that invests in companies that have demonstrated leadership in sustainability issues that are financially material to their business context. It holds 50 stocks in its basket with key holdings in information technology, healthcare and consumer discretionary sectors.

Putnam Sustainable Leaders ETF has accumulated $360.5 million in its asset base from just 6 million at the start of the year. It charges 59 bps in annual fees and trades in a volume of 18,000 shares a day on average.

Valkyrie Bitcoin Miners ETF (WGMI) – AUM Growth 1668%

Valkyrie Bitcoin Miners ETF is an actively managed ETF that invests at least 80% of its net assets (plus borrowings for investment purposes) in securities of companies that derive at least 50% of their revenues or profits from bitcoin mining operations and/or from providing specialized chips, hardware and software or other services to companies engaged in bitcoin mining. Valkyrie Bitcoin Miners ETF holds 22 stocks in its basket with a double-digit concentration on the top three firms.

Valkyrie Bitcoin Miners ETF has amassed $25.3 million in its asset base while trading in an average daily volume of 99,000 shares. It charges 75 bps in annual fees.
Putnam Sustainable Leaders ETF (PLDR): ETF Research Reports

WisdomTree Artificial Intelligence and Innovation Fund (WTAI): ETF Research Reports

Valkyrie Bitcoin Miners ETF (WGMI): ETF Research Reports

NEOS S&P 500 High Income ETF (SPYI): ETF Research Reports

GraniteShares 1.5x Long NVDA Daily ETF (NVDL): ETF Research Reports

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