In a recent episode of “Behind the Ticker,” Taylor Krystkowiak, co-founder of ThemesETFs, shared insights into his career and the innovative strategies behind ThemesETFs. Krystkowiak, who has worked at various firms ranging from Fortune 500 companies to boutique asset managers, brought his extensive experience in macroeconomic analysis and investment strategy to ThemesETFs. The firm, founded by Jose Gonzalez, focuses on providing thematic and fundamental investment strategies at competitive price points, offering a range of ETFs that cater to current market demands.
ThemesETFs aims to differentiate itself by offering niche investment strategies at about 40% lower fees compared to the category average. Their first batch of ETFs includes sectors like artificial intelligence, cybersecurity, cloud computing, banks, airlines, and European luxury brands. Krystkowiak emphasizes that their goal is to provide investors with targeted exposure to specific market sectors while minimizing fees to enhance overall portfolio performance. By offering a variety of investment options, ThemesETFs seeks to cater to investors’ diverse needs and preferences.
A focal point of the discussion was the Global Systematically Important Bank ETF (GSIB). GSIB targets the 28 globally systemically important banks, often referred to as “too big to fail” institutions. These banks are held to higher regulatory standards to ensure financial stability, making them more resilient during economic downturns. Krystkowiak highlights that GSIBs have outperformed other banks and the broader market, especially during rising interest rate environments. Since January 2022, GSIBs have shown a return of over 35%, compared to a 7% decline in the broader banking sector and modest gains in major indices.
Krystkowiak explains that GSIB’s success is attributed to their lower exposure to commercial real estate, higher capitalization, and better liquidity. These banks have also benefited from increased customer deposits and diversified income streams, such as investment banking and wealth management fees. With a quarterly rebalancing strategy, GSIB maintains an equal-weight exposure to all 28 banks on the Financial Stability Board’s list, ensuring a balanced investment approach.
In terms of positioning within a portfolio, Krystkowiak suggests that GSIB can replace broad financial sector exposure or even serve as a core equity growth component. The ETF offers a way to diversify growth beyond tech-heavy names, providing stability and performance amidst market volatility. ThemesETFs employs a lean business model, utilizing artificial intelligence for efficient outreach and distribution, which allows them to offer lower fees to investors.