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The Next Big Theme: January 2021

Jan 20, 2021

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The Next Big Theme: Thematic Newsletter Global X ETFs

Autonomous & Electric Vehicles

Apple Emerges as a Key Player in the AV Industry

Apple has long been coined as a frontrunner in technology. Keeping up with this reputation, efforts to develop their own self-driving car equipped with groundbreaking battery technology may bear some benefits in the next few years.  Although it has been long rumored, new updates allow consumers to have a date in mind: 2024. The task has been named “Project Titan” and was initiated in 2014 with minimal progress. In 2019, project manager Doug Field who previously worked at Tesla, reconstructed the team. Features that should set apart Apple’s vehicles include a significantly cheaper monocell battery with a larger range and lidar sensors, which have already been implemented into iPhone 12 Pro and iPad Pro technology, to scan distances.1 Apple is considering creating their batteries out of Lithium iron phosphate (LFP) to combat the possibility of the battery overheating.2 A company as established as Apple deciding to partake as a newcomer in the industry demonstrates the broadening potential for autonomous vehicles and electric vehicles in disrupting transportation.

Genomics

An Improved Lifestyle with CRISPR Gene-Editing

The first person in the United States has been successfully treated for Sickle Cell Disease, representing a milestone in CRISPR gene-editing technology. Patient Victoria Gray was able to fly on a plane just one year after receiving treatment, despite spending her entire life away from planes due to fears of potential side effects. Her continual improvement is providing evidence of CRISPR gene-editing’s efficacy, a technique that makes very precise changes directly to one’s DNA to treat certain diseases. In addition to Gray, nine other patients received similar treatments, and all are responding well and appear to be fully cured of their diseases.3 The treatment increased protein levels in the bloodstream known as “fetal hemoglobin” through gene-editing and a round of chemotherapy to allow for new cell regeneration.4 CRISPR has already been implemented in the treatment of cancer and vision restoration, with plans to extend its applications much more broadly.

Health & Wellness

Peloton Rides Its Way to the Top

Amidst the pandemic, at-home workout equipment company Peloton was able to quickly become a household name. Now, in an attempt to expand manufacturing capabilities, Peloton Interactive has made a deal to buy fitness-equipment company Precor for $420 million.5 Peloton’s difficulties with mass production to meet consumer demand this past year could be rectified following the close of this deal in early 2021. Precor’s strength in scaling manufacturing is something Peloton hopes to absorb into its own operations. In addition to warehouse and manufacturing space, Peloton will acquire about 100 Precor R&D engineers.6  Precor intends to remain a subsidiary of Peloton. The inability to step foot in gyms amid the pandemic has proven beneficial for Peloton’s at-home workout gear and continues to remain a source of growth for the company.

CleanTech

Japan to Join Asia’s Clean Energy Initiative

Japan’s Prime Minister Yoshihide Suga announced his intentions to reach net-zero carbon emissions by 2050 may prove fruitful for the economy. The annual economic impact of altering existing business models and developing new technologies could reach 90 trillion yen in 2030, and 190 trillion yen in 2050.7 A main strategy Japan plans to adopt in its mission is going electric in the transportation and heating segments. Other notable goals for Japan include banning gasoline-only cars by mid-2030s, halving electricity consumption by semiconductors by 2030 and reducing agricultural emissions to zero.8

Cloud Computing & Social Media

Twitter Enlists the Help of AWS’ Global Cloud

Twitter struck a new multi-year deal with Amazon Web Services (AWS) to serve as Twitter’s new public cloud provider. Hoping to improve consumer experience, the use of AWS could enhance Twitter’s storage and security. The two companies plan on collaborating to create an infrastructure enabling the social media platform to run with increased reliability. Twitter will adopt AWS Graviton2’s processors to enhance its cloud-based programming purposes and AWS container services for the rollout of new features on the platform. In addition to these new upgrades, Twitter intends to continue its previous AWS usage through Amazon CloudFront and Amazon DynamoDB. CloudFront offers Twitter a decreased wait time in data processing while DynamoDB serves as a key-value database processing upwards of 20 million requests per second.9

Lithium

Tesla Looks to Yahua for Lithium Supply Deal

Yahua Industrial Group signed a deal with electric vehicle manufacturer Tesla to supply battery-grade lithium hydroxide for the next five years. The value of the agreement with Yahua’s wholly owned subsidiary Yaan Lithium, procures about 12,600-17,600 tons annually.10 This past year Yaan Lithium was able to double its production at its lithium hydroxide plant despite the pandemic. Tesla already sources lithium from one of the world’s largest lithium producers, China’s Ganfeng Lithium, but the deal with Yahua indicates the firm’s growing need for lithium supply and a desire to diversify suppliers.11

THE NUMBERS

The following charts examine returns and sales growth expectations by theme, based on their corresponding ETFs.

INTRO TO THEMATIC INVESTING COURSE – ELIGIBLE FOR CE CREDIT

Global X has developed an interactive, self-guided Intro to Thematic Investing course, that is designed to share the latest ideas and best practices for incorporating thematic investing into a portfolio.

This program has been accepted for 1.0 hour of CE credit towards the CFP®, CIMA®, CIMC®, CPWA® or RMA certifications. To receive credit, course takers must submit accurate and complete information on the requested forms, complete the entire course, and receive a 70% or higher on the Intro to Thematic Investing Quiz.

For Canadian course takers: This program has been reviewed by FP Canada and qualifies for 1 FP Canada-Approved CE Credit, in the category of Product Knowledge, towards the CFP® certification or QAFP™ certification. To receive credit, course takers must submit accurate and complete information (including Job Title) on the requested forms, complete the entire course, and receive a 70% or higher on the Intro to Thematic Investing Quiz.

Questions on receiving CE credit may be sent to: Education@globalxetfs.com

KEEP UP WITH THE LATEST RESEARCH FROM GLOBAL X

To learn more about the disruptive themes changing our world, read the latest research from Global X, including:

ETF HOLDINGS AND PERFORMANCE:

To see individual ETF holdings and current performance across the Global X Thematic Growth Suite, click the below links:

Multi-Theme: Global X Thematic Growth ETF (GXTG)

Category: Articles

Topics: Consumer Economy, Disruptive Technology, People & Environment, Technology

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Investing involves risk, including the possible loss of principal. There is no guarantee the strategies discussed will be successful. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. Narrowly focused investments may be subject to higher volatility. The funds are non-diversified.

Information Technology companies can be affected by rapid product obsolescence, and intense industry competition. Risks include disruption in service caused by hardware or software failure; interruptions or delays in service by third-parties; security breaches involving certain private, sensitive, proprietary and confidential information managed and transmitted; and privacy concerns and laws, evolving Internet regulation and other foreign or domestic regulations that may limit or otherwise affect the operations. Healthcare, Genomics, Biotechnology and Medical Device companies can be affected by government regulations, expiring patents, rapid product obsolescence, and intense industry competition. CleanTech Companies typically face intense competition, short product lifecycles and potentially rapid product obsolescence. These companies may be significantly affected by fluctuations in energy prices and in the supply and demand of renewable energy, tax incentives, subsidies and other governmental regulations and policies.The risks related to investing social media companies include disruption in service caused by hardware or software failure, interruptions or delays in service by third-parties, security breaches involving certain private, sensitive, proprietary and confidential information managed and transmitted by social media companies, and privacy concerns and laws, evolving Internet regulation and other foreign or domestic regulations that may limit or otherwise affect the operations of such companies. There are additional risks associated with investing in lithium and the lithium mining industry.

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Shares of ETFs are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Beginning October 15, 2020, market price returns are based on the official closing price of an ETF share or, if the official closing price isn’t available, the midpoint between the national best bid and national best offer (“NBBO”) as of the time the ETF calculates current NAV per share. Prior to October 15, 2020, market price returns were based on the midpoint between the Bid and Ask price. NAVs are calculated using prices as of 4:00 PM Eastern Time. The returns shown do not represent the returns you would receive if you traded shares at other times.

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