ETF data can provide some very interesting perspectives on shifting sentiment among investors. With worldwide ETF assets surging to a new record of $8.8 trillion, according to data provider TrackInsight, ETFs as a path to investment are obviously here to stay.
Investors are selling out of ETF assets
But beyond that there are also some interesting patterns emerging from the latest batch of ETF flow data from the French data specialist. Spooked by ongoing volatility and increasingly hostile rhetoric from politicians and regulators, investors sold $150 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 $6.6 Billion in AuM in May to just $4.1 Billion in June.
For example, the Frankfurt-listed BTCetc Bitcoin Exchange Traded Crypto ETF (BTCE), launched by ETF platform HANetf, hit over $1bn AuM in February. The fund had dropped from a peak of 52.9 in mid-April to trade at 28.16 at time of writing. Assets have plunged to just over $600m, according to Bloomberg data.
“Our data shows investors sold their positions in Bitcoin ETFs in May as the cryptocurrency price crashed,” noted Anaelle Ubaldino, Head of ETF Research and Advisory at TrackInsight. “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.”
Silver price in focus for ETF investors
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 $3.3 Billion of new assets over May. Silver ETFs have also benefited from positive flows, with $515 Million of new assets added in May. Assets in Silver ETFs now stand at an all-time record of $27 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% 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% year-to-date. The fund has seen modest flows of $38 million year-to-date indicating many investors may be unaware of this opportunity.
It is interesting that Energy has been the best performing sector so far in 2021, according to TrackInsight. “Energy ETFs recorded a strong month in May as Oil reached a new one-year high,” Ubaldino added. “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.”
It is notable that among the top 10 performing ETFs on a YTD basis, there are FOUR energy-focused ETFs in the top five. This includes the Invesco Dynamic Energy Exploration & Production ETF, at +67.63% (to end of May), and the First Trust ISE Revere Natural Gas Index Fund, up +65.81%. Notable mention should also go to North Shore Global Uranium Mining ETF, which is one of the few non-oil and gas ETFs in the pack, up 52.93% as the uranium price starts to come good.
