Thematic ETFs Will Allow FAs 'to Stand Out': CEO

Thematic ETFs Will Allow FAs 'to Stand Out': CEO

Shana Sissel and other panelists at the Wealth Management EDGE conference agreed,though, that thematics are difficult to define.

Wealth Management Editor
Reviewed by: Staff
Edited by: James Rubin

Thematic ETFs held the spotlight Tuesday during a panel discussion at the Wealth Management EDGE conference in Ft. Lauderdale, Fla., and participants agreed that they represent a clear path for financial advisors to shine in a marketplace where most investors are riding broad market indexes.

“Stand for something; thematic ETFs allow you to do that because it gives you a story from a sales and marketing perspective that’s different,” said Shana Sissel, chief executive officer at Banrion Capital Management.

By introducing clients to thematic strategies, Sissel said, “You will stand out and that alone will probably get you a better chance at their business than anything else.”

Edward Rosenberg, head of ETFs and fund management at Texas Capital, echoed that sentiment during the panel discussion, which was moderated by Editor in Chief Kristin Myers.

“Think about what your clients really want and design stuff from that, and not from what your competitors are doing,” Rosenberg said.

Fellow panelist Brendan Ahern, chief investment officer at KraneShares, stressed the use of thematic ETFs against the backdrop of broad market funds that are giving investors the same thing.

“If SPY is the only thing people should own, I think that’s a problem for everybody,” he said referencing the SPDR S&P 500 ETF Trust (SPY), which is among the funds boosted by a handful of stocks.

“Thematics is a way to rectify some of the index disfunction out there,” Ahern added. “There's a lot of innovation in ETF industry that’s not getting a lot of attention.”

The Case for Thematic ETFs

But while the panelists supported increased allocations to thematic-strategy ETFs, they also agreed that there is virtually no way of specifically defining what qualifies as a thematic strategy.

“It’s more about what it isn’t than what it is,” Sissel said. “Generally speaking, thematic doesn’t fall into traditional style boxes.”

Rosenberg described thematic investing as “gaining differentiated exposure,” but said that “the hard part is how you define thematics.”

“The problem with thematics is it covers everything we do,” he added. “There’s no real definition because it’s just what’s left over.”

Rosenberg’s advice for financial advisors when it comes to allocating client assets to thematic ETFs is to “look under the hood so you can understand how it operates.”

“You have to understand the unintended consequences of every portfolio,” he said. “Most people just trade based on volume or size, but thematics is the opportunity for alpha over standard benchmarks.”

Sissel agreed that investing in thematic strategies takes extra effort because research and tracking firms have not been able to successfully define thematic as a category.

“Biggest problem in the thematic space is the tools that are out there try to place everything in a specific box,” she said. “There’s no thematic category so they fall into wherever they fit in the style boxes.”

She recommended starting with a specific theme, then “start to look at exposures in the ETFs and forget about style boxes.”

“This entire business is fascinating when you go outside the S&P 500 and Treasuries,” Sissel added. “When you start doing that, you’ll be stocked that you start to attract the exact clients you want that are interested in your brand.”

Jeff Benjamin is the wealth management editor at, responsible for coverage related to the financial planning industry. This includes writing, hosting podcasts, webinars, video interviews and presenting at in-person events.

Jeff is a veteran journalist with more than 30 years’ experience covering the financial markets. He has won more than two dozen national and regional awards for his reporting. He most recently worked as a senior columnist at InvestmentNews where he wrote about investment products and strategies, as well as the broader financial planning industry. Prior to that, Jeff worked as an analyst at Cerulli Associates where he researched and wrote reports on the alternative investments industry. Jeff also worked as a money management reporter at Dow Jones Newswires, where he covered the mutual fund industry.

Based in North Carolina, Jeff is a former Marine and has a bachelor’s degree in journalism from Central Michigan University.