2020 was shaping up to be a banner year for exchange-traded funds. With ETFs attracting more than $73 billion in inflows as of early February, according to ETF.com, the industry was on a strong trajectory—driven in large part by the accelerating adoption of thematic ETFs focused on technology and fixed income.
ETF managers appeared on CNBC’s ETF Edge to discuss which investment themes were gaining the most traction and why financial advisors were increasingly treating ETFs as a primary portfolio tool rather than a supplementary one.
Cloud Computing: A Theme Driven by Big Tech, Not Just ETF Marketing
Jay Jacobs, then head of research and strategy at Global X ETFs, made the case that cloud computing stood out as the single hottest investment theme at the time—and argued that the signal was coming from the technology sector itself, not from fund marketers.
“One of the hottest themes right now is cloud computing. And you don’t have to listen to us. Look at what the big tech companies are talking about in their earnings. AWS is most of what Amazon’s focusing on. IBM is replacing their CEO with the head of their cloud unit. Microsoft? All they want to talk about is Azure and their 60% revenue growth. Alphabet is now breaking out their cloud revenue from the rest of their revenue reporting.”
Jay Jacobs, Head of Research and Strategy, Global X ETFs
Global X positioned its Cloud Computing ETF (ticker: CLOU) to capitalize on this shift. Rather than including large-cap technology conglomerates like Amazon or Alphabet—which derive only a portion of their revenue from cloud services—the fund was deliberately tilted toward pure-play Software-as-a-Service (SaaS) companies built on and around cloud infrastructure. Top holdings at the time included Shopify, Paycom, Paylocity, and Zscaler.
As of mid-February 2020, CLOU had climbed more than 15.5% year to date and held approximately $476 million in net assets. Jacobs emphasized the appeal of recurring, subscription-based revenue models that SaaS companies typically employ—describing them as sticky, growth-driven business structures that distinguish pure-play cloud names from broader technology conglomerates.
Robotics and AI: Giving Investors Access to Companies They Don’t Yet Know
Global X extended the same thesis to robotics and artificial intelligence through its Robotics & Artificial Intelligence ETF (ticker: BOTZ). The fund’s top holdings included Nvidia, European industrial automation company ABB, and Intuitive Surgical—names that many retail investors in the US may not immediately associate with the robotics space.
Jacobs argued that this unfamiliarity was precisely the problem a thematic ETF is designed to solve. Investors may be convinced that automation and AI adoption are accelerating, but identifying the specific companies best positioned to benefit—particularly non-US manufacturers and specialized hardware providers—requires research that most retail investors don’t have time to conduct.
“They see that automation is getting more powerful, that companies are investing in robotics, they’re investing in bringing in AI systems, but they don’t really know where to start. Who are the big robotics companies? They’re not common knowledge to U.S. investors. The ETF is a perfect example of giving people that exposure to the companies best positioned in the space.”
Jay Jacobs, Global X ETFs
BOTZ was up more than 3% year to date at the time of the interview and held more than $1.5 billion in net assets—reflecting its more established track record compared to the newer CLOU fund.
Fixed Income ETFs: A Trillion-Dollar Market Still Growing
While thematic equity funds attracted attention, larger ETF issuers were seeing their own wave of inflows—in fixed income. Armando Senra, then head of iShares Americas at BlackRock, noted that a low-rate environment was pushing investors toward emerging market debt and high-yield bonds as yield-pickup strategies.
“We do believe rates are staying lower. That’s why we’re also recommending emerging market debt and high yield as a way to pick up yield, because we have a moderate-constructive view on market risk. With fixed income ETFs, what you see is the replacement of bonds for fixed income ETFs.”
Armando Senra, Head of iShares Americas, BlackRock
Over half of 2019’s net ETF inflows had gone into fixed income ETFs, a category that had grown to approximately $1 trillion of the overall market. Senra had previously stated, in a September 2019 appearance on ETF Edge, that the fixed income ETF market could double within five years—a projection that reflected the broader institutional shift away from holding individual bonds toward using ETFs as a more liquid fixed income vehicle.
Advisor Adoption: The Broader Force Behind ETF Growth
Ed Rosenberg, then head of ETFs and senior vice president at American Century, framed the overall surge in ETF interest as a function of momentum within the financial advisory community. As more advisors incorporate ETFs into their standard toolkits, demand naturally flows into a wider variety of fund types—both thematic and broad-market.
“As the landscape shifts and advisors want more and more ETFs, they’re going to look to different versions, whether it’s thematic or whether it’s basic. They’re just going to come more into play. We’ve never been off to the start that I’ve seen and, quite frankly, it looks like we could be in for a great year for all of us.”
Ed Rosenberg, Head of ETFs, American Century
Key Takeaways for Investors and Advisors
- Thematic ETFs like CLOU and BOTZ allow investors to express conviction in long-term technology trends without needing to identify individual winners.
- Pure-play focus matters: funds that concentrate on companies whose core business is cloud or robotics behave differently from broad tech ETFs that include these as side businesses.
- Fixed income ETFs are increasingly replacing direct bond holdings, particularly in low-rate environments where investors seek yield through emerging market debt or high yield.
- Advisor adoption is a structural tailwind for ETF growth across all categories—thematic, factor-based, and plain-vanilla index funds alike.
- Liquidity and transparency are core reasons institutional and retail investors prefer ETF wrappers for fixed income exposure over holding individual bonds.
Note: All figures, fund performance data, and AUM figures cited in this article reflect information reported as of mid-February 2020 and are included for historical context only. They do not represent current fund performance or holdings.