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Day-Trader Frenzy for Trendy Stocks Is Defying Decades of Losses

  • Pricey funds tracking investment trends are seeing high demand
  • Thematic ETFs historically lost up to 5% annually, study shows
Photovoltaic panels on the Natewood Solar Farm in Hailsham, U.K.
Photographer: Chris Ratcliffe/Bloomberg

Day traders getting rich buying trendy companies from solar power to cloud computing are defying two decades of money-losing history in ETFs that follow the approach.

Stuffed with overvalued stocks, exchange-traded funds targeting the hottest investment themes actually lost as much as 5% per year on a risk-adjusted basis between 2000 and 2019, according to new research.