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Day: September 22, 2026

Gen Z’s Thematic ETF Mania: Risks | Analysis by Brian Moineau

Posted on by Brian Moineau

TL;DR

  • Thematic ETFs are back with Gen Z: roughly $76 billion of net inflows since December 2024, with about one-third into AI-linked funds, while Morningstar’s fee and persistence data suggest most themes lag broad markets over time. [1][2]
  • Duplication is the hidden risk: the S&P 500’s top 10 holdings sit near 37.8% weight and the Nasdaq‑100’s top 10 near 52%, so many “AI” or “tech” themes just repackage Microsoft, Apple, and NVIDIA at higher fees. [3][4]
  • Daily ETF transparency is no longer guaranteed: semi‑transparent active ETFs don’t publish full holdings every day, so “look under the hood” isn’t a one-click promise for hot themes. [5][6]

What the source said

CNBC reports that investors—especially Gen Z—are returning to thematic ETFs (AI, space, infrastructure) after pulling back during 2022–2024 drawdowns, with Morningstar tallying about $95 billion of theme inflows in 2020–2021 and another $76 billion since December 2024, roughly one‑third tagged to AI funds. [1][2]

Nasdaq’s 2024 Retail ETF Investor survey of 2,000 investors (±2% margin) found 75% of Gen Z hold ETFs in retirement accounts and 34% show interest in thematics, confirming demand for “expressive” exposures. [1][16]

Todd Rosenbluth of TMX VettaFi told CNBC that themes can complement diversified cores but warned on fees, holdings, and overlap, echoing the “don’t just re-buy Apple and Microsoft” caution. [1]

Why it matters

For Gen Z savers using 401(k)s, IRAs, or broker apps, thematic ETFs offer targeted exposure to trends like AI and infrastructure, but they often carry higher expense ratios near 0.60% versus roughly 0.40% for broad funds, plus elevated closure risk. [2][7]

For issuers and index providers such as BlackRock and Global X, themes are fee engines: concentration in the S&P 500 (top‑10 near 37.8%) and Nasdaq‑100 (top‑10 near 52%) means “AI” wrappers can sell investors what they already own—just at higher fees. [2][3][4]

Original analysis

Consensus view: “Thematic ETFs help investors ‘double‑click’ structural trends and complement a core.” That’s true in theory, but fees, concentration, and survival bias do most of the damage in practice.

Back‑of‑envelope calculation

  • Flows: CNBC cites $76B into themes since Dec 2024; assume one‑third to AI ≈ $25B. [1]
  • Fees: If thematics average ~0.60% versus non‑thematics near ~0.41% (2020 asset‑weighted), then new AI fee revenue ≈ $25B × 0.60% ≈ $150M per year—before any market gains. [7]
  • Investor math: A 30–60 bps fee gap over 10 years on $10,000 is roughly $300–$600 in cumulative drag before compounding, and worse if the theme overlaps with S&P 500/Nasdaq‑100 exposures you already hold. [2][3][7]

2x2 framework: How to pick a thematic ETF that actually adds something

  • Low overlap + Low fee (<0.40–0.50%): Sweet Spot. Look for mid‑caps, global suppliers, and niche enablers absent from VOO/QQQ.
  • Low overlap + High fee (≥0.60–0.95%): Maybe. Demand clear index rules, sane capacity, and credible liquidity.
  • High overlap + Low fee: Meh Core‑Plus. Consider equal‑weight or factor alternatives that diversify away from mega‑cap concentration.
  • High overlap + High fee: Worst Box. Avoid “story wrappers” that mirror Mag‑7 with a pricier label.

Why duplication risk is bigger now

  • Index concentration is historically elevated: the S&P 500’s top‑10 weight is ~37.8%, and the Nasdaq‑100’s top‑10 reached ~52% at year‑end 2025, so many AI themes just stack NVIDIA, Microsoft, Alphabet, Meta, and Amazon. [3][4]
  • Morningstar’s “7 charts” shows 66% of US thematic funds tilt “growth” versus only 11% “value,” compounding the same factor bets already embedded in cap‑weighted indexes. [2]

Historical analogue: the clean‑tech and cannabis cycles

  • Clean‑energy ETFs like ICLN and TAN peaked in 2021 and then slumped as rates rose; Morningstar chronicles multi‑fold AUM drawdowns and sharp volatility in 2022–2023. [8][9]
  • Cannabis ETFs (e.g., MJ) surged in 2018–2020 and then reversed, with ETF.com documenting episodes of odd premiums/discounts and fragile liquidity during stress. [10][11]
  • Morningstar Indexes finds limited persistence in thematic leadership, with rotation across horizons rather than steady outperformance. [12]

Contrarian read

  • The crowd says “Buy AI‑thematic ETFs to ride the secular boom,” but a better sleeve may exclude the Mag‑7 and focus on picks‑and‑shovels like power equipment, specialty chemicals, memory, testing, and grid software—areas many AI indexes underweight. [2][3][4]

Named‑stakeholder breakdown

  • BlackRock, Global X, Roundhill: Gather assets now, collect 0.50%–0.95% fees, and shutter stragglers later if flows fade. [2]
  • Nasdaq (survey publisher) and VettaFi (research/distribution): Their data and models seed product launches and model portfolios that steer retail flows. [1][2]
  • SEC and investor‑education shops: Semi‑transparent active ETFs complicate the “daily holdings” promise, so disclosure and basket policies remain under scrutiny in 2026. [5][6]

What others are missing

Holdings transparency is no longer binary: semi‑transparent active ETFs with proxy baskets don’t publish full daily portfolios, weakening the investor shortcut of “just run an overlap check” on a website. [5][6]

In thematics, where index IP, reconstitution cadence, and trading liquidity are the paid edge, partial transparency makes it harder to see if a fund drifted toward Mag‑7 concentration or quietly upped turnover to chase narrative names. [5][6]

What to watch next

  1. By December 31, 2026, closures: At least 10 US‑listed thematic ETFs will liquidate or merge as flows consolidate into a few AI and infrastructure leaders, consistent with elevated post‑2021 closure trends. [2]

  2. By Q2 2027, fees: A top‑5 AI‑thematic ETF by AUM will cut its expense ratio below 0.39% as performance dispersion grows and price competition intensifies within “premium” niches. [13][14]

  3. By June 30, 2027, overlap: The average top‑10 holding overlap between the five largest AI‑thematic ETFs and the S&P 500 will fall by at least 25% from current levels as issuers retool indexes toward purer picks‑and‑shovels exposure. [3][15]

My take

I’d cap a Gen Z “sandbox” at 5%–10% of the portfolio, after maxing tax‑advantaged accounts and building a low‑cost core like VTI/VOO plus VXUS/IXUS with a plain bond sleeve. [2]

Inside the sandbox, I’d avoid Mag‑7‑heavy AI wrappers and target under‑owned beneficiaries—power gear, memory, testing, industrial software—while capping fees at 0.50% and checking overlap quarterly with tools like ETF Research Center. [3][15]

If a theme can’t prove distinct exposure, disciplined methodology, and fair pricing, it doesn’t earn a slot—because the story you buy should differ from the story you already own. [2][3]

Sources

  1. These Gen Z‑approved investment funds are having a moment — CNBC (https://www.cnbc.com/2026/09/21/themed-etfs-gen-z-investors.html) — News peg, flow figures ($95B in 2020–2021; $76B since Dec 2024; ~one‑third to AI) and Rosenbluth’s guidance.
  2. The Thematic Fund Landscape in 7 Charts — Morningstar (https://www.morningstar.com/funds/thematic-fund-landscape-7-charts) — Growth bias (66% vs 11%), survival risks, asset history, and fee differentials.
  3. S&P 500 — S&P Dow Jones Indices (https://www.spglobal.com/spdji/en/indices/equity/sp-500/) — Concentration data; Top‑10 weight around 37.8% for duplication context.
  4. 2025 Nasdaq‑100 Reconstitution and Performance Highlights — Nasdaq (https://www.nasdaq.com/articles/global-indexes/2025-nasdaq-100-reconstitution-and-performance-highlights) — Top‑10 weight near 52% at 2025 year‑end.
  5. Exchange‑Traded Funds: A Small Entity Compliance Guide — SEC.gov (https://www.sec.gov/investment/exchange-traded-funds-small-entity-compliance-guide) — ETF Rule 6c‑11 and disclosure mechanics.
  6. Active Semi‑Transparent ETFs: What’s Under the Hood? — Charles Schwab (https://www.schwab.com/learn/story/active-semi-transparent-etfs-whats-under-hood) — Why semi‑transparent active ETFs don’t publish full daily holdings.
  7. Morningstar Finds Falling Fees Saved Investors $6.2 Billion in 2020 — Morningstar (https://newsroom.morningstar.com/news/news-details/2021/Morningstar-Finds-Falling-Fees-Saved-Investors-6-2-Billion-in-2020/default.aspx) — Asset‑weighted expense ratios (0.61% thematic vs 0.41% non‑thematic in 2020).
  8. Why Are Climate Funds in the Dumps? — Morningstar (https://www.morningstar.com/sustainable-investing/why-are-climate-funds-dumps) — Clean‑energy ETF slump post‑2021.
  9. The Election Is One More Headache for US Clean Energy ETFs — Morningstar Canada (https://global.morningstar.com/en-ca/etfs/election-is-one-more-headache-us-clean-energy-etfs) — ICLN and TAN boom‑bust AUM patterns.
  10. US Marijuana ETF Boom Stalls — ETF.com (https://www.etf.com/sections/news/us-marijuana-etf-boom-stalls) — Cannabis ETF surge and reversal chronology.
  11. UPDATE: Strange Case Of Premiums For Pot ETF — ETF.com (https://www.etf.com/sections/news/update-strange-case-premiums-pot-etf) — Premium/discount behavior during narrative spikes.
  12. Thematic Investing: Performance and Rotation Insights — Morningstar Indexes (https://index-website-frontend-prd.mif0286.eas.morningstar.com/insights/analysis/bltfe9deb5617110ea2/thematic-investing-performance-and-rotation-insights) — Leadership rotation and limited persistence.
  13. Fund Fee Wars Shift to Complex Funds and New Strategies — Morningstar (https://www.morningstar.com/en-us/business/insights/blog/us-fund-fee-study) — Fee competition spreading into higher‑fee ETF niches.
  14. How Active ETFs Are Reshaping Fund Fees — Morningstar (https://www.morningstar.com/funds/how-active-etfs-are-reshaping-fund-fees) — 2025 fee trends and pricing pressure within ETFs.
  15. Fund Overlap Tool — ETF Research Center (https://www.etfrc.com/funds/overlap.php) — Quantifies duplication between thematic ETFs and core holdings.
  16. Nasdaq 2024 ETF Retail Survey Report — Nasdaq (https://www.nasdaq.com/docs/2025/06/18/2024-ETF-Retail-Survey-Report.pdf) — Survey methodology (2,000 respondents; ±2%) and Gen Z interest metrics.

Vegetable Tart With Goat Cheese | Made by Meaghan Moineau

Posted on by Meaghan Moineau

It was one of those Wednesday evenings where the clock seemed to sprint from 5 to 7 PM in the blink of an eye. My stomach was grumbling louder than my Spotify playlist, and all I could think about was something delicious yet uncomplicated. The kind of meal that makes you feel like a culinary wizard without actually breaking a sweat. Enter stage left: the Vegetable Tart with Goat Cheese. This tart is my secret weapon, perfect for when I want something that looks as good as it tastes with minimal fuss. It’s a colorful showstopper that tastes like you planned it all week, but shhhh… it’s our little secret!

Jump to Recipe

What You’ll Need

Trust me, if your pantry and fridge are anything like mine, you’re already halfway there. This tart comes together with just a few key stars and supporting players.

  • Puff pastry (the freezer-friendly hero of this dish)
  • Frozen spinach
  • Mushrooms
  • Red bell pepper
  • Goat cheese (the creamy crown jewel)
  • Salt and pepper

How to Make Vegetable Tart With Goat Cheese

  1. Preheat your oven to 350°F. This is the first step to turning your kitchen into a cozy haven.
  2. Grab your puff pastry from the freezer and roll it out onto a cookie sheet, keeping the parchment paper underneath to prevent any sticky situations.
  3. Spread the frozen spinach evenly over the pastry, but leave about an inch of edge untouched. This creates a beautiful border that puffs up like magic.
  4. Layer the mushrooms on top of the spinach. They’ll release their juices, adding depth to the flavor party.
  5. Next, scatter the red bell pepper slices over the mushrooms. This vibrant red layer will make your tart pop, both visually and taste-wise.
  6. Finally, sprinkle crumbled goat cheese over the top. As it bakes, it will melt into creamy pockets of tangy goodness.
  7. Season with a sprinkle of salt and a few cracks of fresh pepper to taste.
  8. Bake in the preheated oven for 15-20 minutes, or until the edges of the tart are golden brown and the cheese is bubbly and slightly caramelized.

Cook’s Notes

Alright, here’s the inside scoop: always make sure your puff pastry is still cold when you start rolling it out, as it puffs better. If your mushrooms seem a bit too wet after slicing, give them a quick pat with a paper towel to avoid sogginess. This tart is best enjoyed fresh out of the oven, but if you do have leftovers, store them in an airtight container in the fridge and reheat them in the oven to maintain that crispy crust. If you’re planning ahead, all the veggies can be prepped a day in advance, making the assembly a breeze when you’re ready to bake.

Make It Your Own

This tart is a blank canvas for your culinary whims. Here are some ideas to get those wheels turning:

  • Switch the spinach for kale for a heartier texture.
  • Love a bit of heat? Add sliced jalapeños on top for a spicy kick.
  • Not a fan of goat cheese? No problem. Try it with feta cheese instead for a milder flavor.
  • For a sweet twist, caramelize some onions and layer them under the spinach.

If you try this, I’d love to hear how it turns out — drop a comment or tag me! This is a dish that invites creativity, so feel free to experiment and make it truly yours. Happy cooking, friends!

Related Reading

Goes Well With

If you want to round out the meal, here’s what I’d pair it with over on meaghanmoineau.com:

Related update: Vegetable Tart With Goat Cheese