2024 was a standout year for investments, with the S&P 500 Total Return Index soaring over 28%. On top of that, the exchange-traded fund (ETF) market hit some major milestones. For the first time ever, U.S. ETFs attracted more than $1 trillion in inflows, with actively managed ETFs accounting for nearly one-third of that total. Plus, 2024 saw the much-anticipated launch of spot crypto ETFs in the U.S., and domestic ETF launches surpassed 550, setting new records.

Let’s dive into the biggest investment themes and milestones of 2024!

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### Crypto ETFs Take Center Stage
In a groundbreaking move, the U.S. approved crypto ETFs this year. Bitcoin ETFs launched in January, followed by Ethereum ETFs in May. By year’s end, bitcoin-focused ETFs held an astonishing $119.4 billion in assets, while Ethereum-related ETFs managed $9 billion. While Ethereum’s growth is impressive, it’s dwarfed by Bitcoin’s dominance.

Interestingly, ETFs that blend Bitcoin and Ethereum or mix crypto with other assets like gold or Treasury bonds have also gained traction, collectively managing over $200 million. Expect more innovative crypto ETF options to emerge in the coming year.

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### Defense Technology Shines Amid Global Tensions
With rising geopolitical tensions, defense technology became a hot investment theme in 2024. Global defense spending reached a historic $2.4 trillion, driven by modernization efforts and advancements in cyber defense, drones, robotics, and artificial intelligence.

The Global X Defense Tech ETF (SHLD) stood out with an impressive 37% year-to-date (YTD) return. One of its key holdings is Palantir, a leader in AI-driven defense solutions.

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### Automation, AI, and Reshoring Lead the Way
Automation and artificial intelligence (AI) surged as top investment themes in 2024. These technologies became crucial as reshoring efforts ramped up under policy changes that prioritized domestic manufacturing. With fewer workers available due to stricter immigration laws, companies turned to robotics and AI to boost productivity and manage costs.

ETFs like the Tema American Reshoring ETF (RSHO) capitalized on this trend, growing to $150 million in assets with over 25% YTD returns. Meanwhile, the Franklin Intelligent Machines ETF (IQM) saw a 34% YTD return by investing in companies driving automation. The ARK Autonomous Technology and Robotics ETF (ARKQ) wasn’t far behind with a 33% YTD return.

Generative AI, highlighted by tools like ChatGPT, also grabbed attention. The Roundhill Gen AI and Tech ETF (CHAT) delivered a strong 34% YTD return, while the Themes Generative Artificial Intelligence ETF (WISE) posted gains of 31.5%.

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### Nuclear Power Makes a Comeback
Nuclear energy staged a revival in 2024 as a clean and reliable power source for energy-intensive technologies like AI, crypto mining, and quantum computing. Small modular reactors (SMRs) emerged as a key innovation in this space.

The Range Nuclear Renaissance Index ETF (NUKZ) led the pack with exposure to SMRs and other nuclear advancements. Meanwhile, the newly launched Themes Uranium Nuclear ETF (URAN) showed strong potential based on backtested performance.

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### Energy Infrastructure Under Pressure
Energy infrastructure emerged as another critical theme this year. Technologies like electric vehicles (EVs), AI, and crypto mining placed enormous demand on aging power grids. The Boston Consulting Group predicts that data centers alone could triple their share of U.S. electricity consumption by 2030.

Despite government investments through initiatives like the Inflation Reduction Act of 2022, much of the U.S. grid remains outdated, with components dating back to the 1960s and 1970s. This has created opportunities for companies modernizing energy systems.

The First Trust NASDAQ Clean Edge Smart Grid Infrastructure ETF (GRID) grew to $2 billion in assets with a solid 20% YTD performance. On the other hand, the Alerian Energy Infrastructure ETF (ENFR), which focuses on midstream energy operations like storage and transportation, delivered an outstanding 43.5% YTD return.

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### GLP-1 Weight Loss Drugs Transform Healthcare
GLP-1 weight loss drugs continued to revolutionize healthcare in 2024 with groundbreaking treatments like Novo Nordisk’s Wegovy and Eli Lilly’s Zepbound. These drugs have fueled investor interest despite challenges like high costs and limited insurance coverage. The obesity-drug market is projected to hit $130 billion by 2030.

ETFs targeting this trend included the Tema GLP-1 Obesity & Cardiometabolic ETF (HRTS), the Roundhill GLP1 and Weight Loss ETF (OZEM), and the Amplify Weight Loss Drug & Treatment ETF (THNR). These funds focus on companies innovating in this growing sector.

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### Key ETF Trends of 2024
This year brought exciting innovations and trends in thematic ETFs:
– **Pure-Play Focus**: Investors showed strong interest in highly targeted ETFs like the Roundhill Magnificent Seven ETF (MAGS), which uses swaps to concentrate on seven leading tech stocks. It now boasts $1.46 billion in assets.
– **Leverage Gains Popularity**: Leveraged ETFs gained traction. The ProShares Ultra Semiconductors (USD) surged 134% YTD with its 2X exposure to semiconductor stocks. Similarly, the GraniteShares 2X Long NVDA ETF (NVDL) delivered an astonishing 370% YTD return.
– **Options Strategies**: Some ETFs adopted options overlays to generate income, even during downturns. The YieldMax Innovation Option Income Strategy ETF (OARK), for instance, offered a 40.8% annual yield while returning 13% this year.
– **Active vs. Passive**: Active management gained momentum as more investors sought higher returns despite higher risks and fees. Today, there are 60 actively managed thematic ETFs out of 152 total thematic funds.

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As thematic investing continues to evolve, investors have more choices than ever to capitalize on emerging trends across industries—from technology and energy to healthcare and defense!