Investors loved the “historic stocks.” Now they love story ETFs.
A stock of history is not driven by revenue or assets, but by a simple and engaging narrative: a dynamic new boss, dazzling technology, or customers who go ga-ga for their products. A historical ETF is a publicly traded fund that invests not in an entire market or a single sector, but rather in a concept or trend.
You’re probably better off buying a story ETF than a story stock; at least the background is a bit diversified. But the ETFs of history carry their own risks.
Often called thematic ETFs, these funds are distributed across sectors, trying to take advantage of ideas such as alternative energy, cloud computing or 3D printing. Others buy stocks that could benefit as more people work from home, demanding gender or racial diversity, or abundant money for their pets.
The assets of these funds have grown by an average of 45% annually over the past three years, according to William Baun of Fuse Research Network in Needham, Mass.