Hi! In this week\u2019s ETF Wrap, you\u2019ll see how investor demand for tech and artificial-intelligence ETFs this year pales in comparison with their strong performance.<\/p>\n
Please send feedback and tips to christine.idzelis@marketwatch.com or isabel.wang@marketwatch.com. You can also follow me on Twitter at\u00a0@cidzelis<\/a>\u00a0and find me on\u00a0LinkedIn. Isabel Wang is on Twitter at\u00a0@Isabelxwang<\/a>.<\/p>\n Sign up\u00a0<\/strong>here<\/strong>\u00a0for our weekly ETF Wrap.<\/strong><\/p>\n Investors in the market for exchange-traded funds have largely stepped to the sidelines during this year\u2019s run-up of stocks linked to technology and artificial intelligence, according to CFRA Research\u2019s Aniket Ullal.<\/p>\n Invesco QQQ Trust Series I Flows into the giant ETF\u2014whose top holdings on Wednesday included so-called Big Tech stocks including Apple Inc. GOOG, But ETF investors still appear hesitant about tech, said Ullal, head of ETF data and analytics at CFRA Research, in a phone interview.\u00a0<\/p>\n The Vanguard Information Technology ETF While QQQ points to \u201csigns of a possible turnaround in flows into tech,\u201d that\u2019s not a \u201cdefinitive signal,\u201d said Ullal. \u201cThe fact that VGT and XLK still have negative flows indicates there\u2019s still some hesitation for investors.\u201d<\/p>\n Some megacap companies held by Invesco QQQ Trust Series I, such as Amazon and Tesla, aren\u2019t in the portfolios of the Vanguard Information Technology ETF and Technology Select Sector SPDR Fund, according to Ullal. While sometimes referred to as Big Tech, Amazon and Tesla belong to the S&P 500 index\u2019s consumer-discretionary sector, FactSet data show.<\/p>\n \u201cInvestors like to include Amazon as part of the AI story in investing, but Amazon is not held in some of the more traditional tech ETFs,\u201d said Ullal. \u201cQQQ captures a lot of the stocks that investors tend to be interested in when they\u2019re looking at tech innovation, AI and those kinds of trends.\u201d<\/p>\n The Vanguard Information Technology ETF and Technology Select Sector SPDR Fund follow the Global Industry Classification Standard, or GICS, in selecting U.S. tech stocks, he said.<\/p>\n Meanwhile, shares of Amazon, the e-commerce company whose business operations also include cloud-computing services, have surged around 72% so far this year through Thursday, FactSet data show. Tesla\u2019s stock has skyrocketed about 124% over the same period.\u00a0<\/p>\n The massive gains posted in 2023 by Invesco QQQ Trust Series I, which has around $206 billion of assets under management, have surpassed the large gains of the Vanguard Information Technology ETF and Technology Select Sector SPDR Fund.\u00a0<\/p>\n The Technology Select Sector SPDR Fund, which tracks an index of tech stocks in the U.S. large-cap stock benchmark S&P 500, has soared 38% this year, while the Vanguard Information Technology ETF, which invests in U.S. tech stocks both large and small, has climbed 36% so far in 2023, according to FactSet data.<\/p>\n As for investor demand, the Vanguard Information Technology ETF has seen $110 million of outflows over the past week through Wednesday, bringing its total withdrawals this year to about $1.1 billion, FactSet data show. And investors have pulled $232 million from the Technology Select Sector SPDR Fund in the past week through Wednesday, with its outflows this year totaling about $2 billion.<\/p>\n But demand for the Invesco QQQ Trust Series I has recently picked up.<\/p>\n The fund attracted $2.2 billion of net capital flows over the past week through Wednesday, after on Sept. 12 the ETF raked in $3.3 billion for its biggest daily inflow since March, FactSet data show. That brought its year-to-date flows to $3.8 billion, after seeing just $147 million of inflows this year through August.<\/p>\n A cheaper, less liquid version of the fund, the Invesco Nasdaq 100 ETF Looking at QQQ and QQQM, which both track the Nasdaq-100 index, Ullal said \u201cthe flows were not as large as we would expect\u201d this year given their returns.<\/p>\n Similarly, while the Global X Robotics & Artificial Intelligence ETF \u201cGiven the positive sentiment around AI,\u201d said Ullal, \u201cone would have expected flows to have been stronger.\u201d<\/p>\n So far this month, shares of the Global X Robotics & Artificial Intelligence ETF are down 3.5% through Thursday. Invesco QQQ Trust Series I has slipped 0.2% over the same period, while the Vanguard Information Technology ETF has dropped 2.4% and the Technology Select Sector SPDR Fund has fallen 2%, FactSet data show.<\/p>\n Meanwhile, the recently launched BNY Mellon Innovators ETF, which began trading in May, is down 2.2% so far in September.<\/p>\n \u201cThis is a strategy that invests not just in technology, but in innovation-driven companies that we like to say are changing the way we live, work and play,\u201d said Stephanie Pierce, chief executive\u00a0 officer of Dreyfus, Mellon and Exchange-Traded Funds at BNY Mellon Investment Management, in a phone interview.<\/p>\n As usual, here\u2019s your look at the top- and bottom-performing ETFs over the past week through Wednesday, according to FactSet data.<\/p>\n
\n QQQ,<\/span>
\n which tracks the Nasdaq-100 index
\n NDX,<\/span>
\n has surged almost 42% so far this year through Thursday, FactSet data show.<\/p>\n
\n AAPL,
\n
\n Microsoft Corp.,
\n MSFT,
\n
\n Amazon.com Inc.
\n AMZN,
\n
\n Nvidia Corp.
\n NVDA,
\n
\n Meta Platforms Inc.
\n META,
\n
\n Tesla Inc.
\n TSLA,
\n
\n and Alphabet Inc.
\n GOOGL,
\n
\n
\n \u2014 point to appetite for the fund over the past week after anemic demand over the first eight months of 2023.<\/p>\n
\n VGT,<\/span>
\n which has $52 billion of assets under management, and Technology Select Sector SPDR Fund
\n XLK,<\/span>
\n with $49 billion of assets, have each seen outflows over the past week through Wednesday as well as so far this year, according to FactSet data.\u00a0<\/p>\n
\n QQQM,<\/span>
\n tends to attract retail investors and financial advisers who may be more focused on a buy-and-hold investment strategy rather than the tactical trading strategies pursued by institutions, said Ullal. That fund, which trades under the ticker QQQM, has around $6 billion of inflows this year through Wednesday, FactSet data show.<\/p>\n
\n BOTZ
\n has $638 million of inflows this year through Wednesday, Ullal said he would have anticipated more investor demand for the fund based on its performance. Shares of the ETF are up 25.5% so far this year through Thursday.<\/p>\nThe good\u2026<\/h2>\n
\n
\n \n Top Performers<\/strong><\/p>\n<\/td>\n \n %Performance<\/strong><\/p>\n<\/td>\n<\/tr>\n \n \n Sprott Uranium Miners ETF
\n URNM\n <\/td>\n\n 6.9<\/p>\n<\/td>\n<\/tr>\n \n \n AdvisorShares Pure US Cannabis ETF
\n MSOS\n <\/td>\n\n 5.6<\/p>\n<\/td>\n<\/tr>\n \n \n iShares MSCI Brazil ETF
\n EWZ\n <\/td>\n\n 5.4<\/p>\n<\/td>\n<\/tr>\n \n \n Global X Uranium ETF
\n URA\n <\/td>\n\n 5.2<\/p>\n<\/td>\n<\/tr>\n \n \n United States Natural Gas Fund LP
\n UNG\n <\/td>\n\n 4.5<\/p>\n<\/td>\n<\/tr>\n \n \n Source: FactSet data through Wednesday, Sept. 13. Start date Sept. 7. Excludes ETNs and leveraged products. Includes NYSE, Nasdaq and Cboe traded ETFs of $500 million or greater<\/p>\n<\/td>\n \n <\/td>\n<\/tr>\n<\/table>\n \u2026and the bad<\/h2>\n
\n
\n \n Bottom Performers<\/strong><\/p>\n<\/td>\n \n %Performance<\/strong><\/p>\n<\/td>\n<\/tr>\n \n \n iShares U.S. Aerospace & Defense ETF
\n ITA\n <\/td>\n\n -3.4<\/p>\n<\/td>\n<\/tr>\n \n \n iShares U.S. Home Construction ETF
\n ITB\n <\/td>\n\n -2.9<\/p>\n<\/td>\n<\/tr>\n \n \n Global X Cloud Computing ETF
\n CLOU\n <\/td>\n\n -2.8<\/p>\n<\/td>\n<\/tr>\n \n \n SPDR S&P Aerospace & Defense ETF
\n XAR\n <\/td>\n\n -2.6<\/p>\n<\/td>\n<\/tr>\n \n \n U.S. Global Jets ETF
\n JETS\n <\/td>\n\n -2.5<\/p>\n<\/td>\n<\/tr>\n \n \n Source: FactSet data <\/p>\n<\/td>\n \n <\/td>\n<\/tr>\n<\/table>\n New ETFs<\/h2>\n
\n
\n NVDA,
\n
\n The new ETFs are the Direxion Daily NVDA Bull 1.5X Shares
\n NVDU
\n and Direxion Daily NVDA Bear 1X Shares
\n NVDD.<\/span>
\n The funds are leveraged and inverse ETFs that are meant for \u201cshort-term trading purposes,\u201d not buy-and-hold investments, according to the announcement.<\/p>\n<\/li>\n<\/ul>\nWeekly ETF reads<\/h2>\n<\/p><\/div>\n