Underwhelmed (small) holder of ESPO here in SMSF. Took a small position to suck it and see about 8 months ago. Including a small dividend payment, I'm at -0.7% over those 8 months. I suspect the industry dynamics are such that ETFs are probably not the best play (see what I did there?) in the gaming world but REALLY happy to be proven wrong on that hypothesis.

Why are you thinking that Muddled?

Is that the same for an equally balanced etf and a market cap weighted one?

It's possible that I let my fingers type there before thinking about it too much - and yes to continue to demonstrate my muddledness, I suspect it is different in some of these thematic ETFs early in the thematic. Let me be clear I haven't really done a lot of thinking about this and even less actual research. That research probably exists but if not would be an interesting project.

My suspicion is that a diversified portfolio usually of the larger, more liquid businesses early in a thematic likely does not even include several businesses that will be superstars in that thematic over time and that it is likely to include some big mistakes. Of course that's why we pay others with their big brains and research engines to do the research and construct the portfolio. My suspicion is that in these niche thematics, that's really really hard to do - they'll get the construction of the portfolio sub optimised at least as much as it is optimised.

My wondering is might it better with these niche thematics to get in a little later rather than earlier? What I actually do is if I think there's something there in the thematic is take a small position in my SMSF. Theoretically, this means I'll pay some attention to it and dig into the performance of the actual businesses and make some decisions. What it more usually actually means is that I just grumble into my beard about poor ETF construction.

Following on from my previous post wondering about early year performance of thematic ETFs, a short missive from Owen Rask over the weekend. The email was prompted by the 46% fall in CRYP to end of January from listing while pointing out that on the initial investment of $100M Betashares earned $670000 in fees. CRYP performance:

Under the heading of Bad Performance is Normal - Owen's email than says. "An academic research paper titled "Competition for Attention by ETF Providers" used around 18 years of data to show that thematic ETFs underperform by 4% per year in the first five years. Meaning, 'themed' or 'specialist' ETFs tend to do worse than boring ETFs like Vanguard's ASX 300 Shares ETF (VAS) or the BetaShares A200 ETF (A200). 

The paper's authors noted, "Strikingly, over their first five years, specialized ETFs lose about 30% in risk-adjusted terms. Adding: "Overall, [ETF] providers appear to cater to investors' extrapolative beliefs by issuing specialized ETFs that track attention-grabbing themes."