ETF Securities

ETF Securities Thematic Investing Whitepaper July 21 2021

How to use thematic ETFs to invest in the megatrends of the future.

CONTENTS

Thematic Investing Whitepaper INVESTING IN MEGATRENDS

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INVESTING IN MEGATRENDS

WHAT ARE MEGATRENDS?

EXAMPLES OF MEGATRENDS

ACCESS MEGATRENDS WITH THEMATIC ETFS

WHAT CAN THEMATIC ETFS OFFER INVESTORS?

COMMON CRITICISM: THEMATIC ETFS BUY OVERPRICED GROWTH STOCKS

HOW TO SELECT A THEMATIC ETF

ETF SECURITIES’ THEMATIC ETFS: INVEST IN MEGATRENDS

WHERE THEMATIC ETFS FIT IN A PORTFOLIO

CONCLUSION

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INVESTING IN MEGATRENDSWhen constructing portfolios, investors try to isolate sources of return. Common approaches include targeting specific factors like value or growth, or targeting sectors like technology or healthcare. By taking a targeted approach, investors can manage risk, express a view, or outperform.

A new method, which is growing in popularity is to target specific investment themes – or “megatrends” – in place of factors or sectors.In this way investors can access high growth opportunities which are not yet fully captured by conventional sectors or unexpressed by factors. They can also manage risk by hedging against the disruption that global economic ructions can cause.

In this whitepaper we unpack what megatrends are, how they can be identified and invested in, and what they can offer investors.

WHAT ARE MEGATRENDS?The term megatrend was introduced by the author and consultant John Naisbitt in his 1982 book “Megatrends”. In his book, which sold 14 million copies, he forecast that the US would turn into a post-industrial society driven by a knowledge economy. He identified 10 “megatrends” that would drive the change. While some of his predictions had to be revised, several proved correct – especially the growth of the tech sector. His concept of megatrends survives to this day.

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What is a megatrend? A megatrend is a long-term structural shift that transforms economies. They can be distinguished from cycles in that the changes they create are enduring. Examples from previous decades, include the creation of cars, which ended the horse-drawn carriage industry within 30 years. Creating cars did not just make humans more mobile, it also created the modern geography of cities, including highways, suburbs and shopping centres.

The introduction of the television is another example. First introduced to Australia in 1956, the television was in most households by 1975. Television wasn’t just a revolution for media and entertainment, it has also had profound social and cultural impacts. Many sociologists credit the 1960s cultural revolution and the rise of rock and roll to the impact of television.

What megatrends all have in common is they are intertwined with demographic and technological changes, and typically supported by governments. Their uptake is usually exponential; at first there is a time-lag for adoption, then soon the megatrend is everywhere.

“ A megatrend is a long-term structural shift that transforms economies.”

SHARE OF US HOUSEHOLDS USING SPECIFIC TECHNOLOGIES

Source: Our World In Data, 27 July 2019

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“ Megatrends are intertwined with demographic and technological changes, typically supported by government”

Megatrends also have implications for investors as correctly identifying and acting on them can offer, potential upside. Those who invested in media businesses in the 1960s, went on to reap super profits. So too did those buying into computer businesses like Microsoft, Apple and IBM in the 1970s for the PC revolution. This is all an exercise in hindsight of course, however, illustrates the power that megatrends can play in shaping markets and investment outcomes.

EXAMPLES OF MEGATRENDSMegatrends are difficult to identify. They can be abstract and overlapping. At ETF Securities, we believe there are four main categories to group megatrends by, including: Transformative Technology, Society & Lifestyle, Health & Wellness, and Environment & Resources.

Transformative TechnologySuch as cloud computing, 5G, robotics, automation and artificial intelligence, and machine learning.

Society & LifestyleSuch as demographic changes like aging populations, the growing middle class and the rise of social media.

Health & WellnessSuch as biotechnology including mRNA vaccines, genomics and gene editing.

Environmental & ResourcesSuch as the transition away from fossil fuels towards renewables and technology like battery storage.

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Industry 4.0The smart factory, Automonous systems, IoT, machine learning

Technological breakthrough is the most obvious and least controversial. Technological progress has been a defining megatrend since the industrial revolution, which created factories and modern mechanics, but investing in disruptive technology is easier said than done. With many investors missing out even when the opportunities stare them in the face. Famously, the Washington Post declined to invest in Google, the company set to disrupt it. In Australia, Fairfax Media declined to invest in Carsales.com.au and Domain, which later undermined it.

Where might technological breakthroughs come from this decade? One possibility is robotics, automation and artificial intelligence (RAAI), or “industry 4.0”. Industry 4.0 is the increasing automation of manufacturing and services, such that machines manage other machines—via “machine learning”. In concrete terms, industry 4.0 is where businesses use modern robotics, the internet, and big data to create remotely controlled factories, self-driving cars, and self-programming computers and more.

An ongoing example is Amazon’s giant warehouses. Historically, warehouses consisted of static shelves. Workers would come and add or remove items to and from the shelves as supplies and demand came in. In Amazon’s warehouses by contrast the shelves are all mobile and moved by robots. The robots move items as customers buy them via a complex barcoding and computer system. Thanks to machine learning, the robots holding trending or popular items, have learnt to move nearer delivery points. In this picture, much of the work done by humans, has been replaced by machines.

Society and lifestyle are changing demographics and social fabric. This is the most complex megatrend and has several threads, many of which tie into other megatrends. In emerging markets, especially India, the population is getting younger. In developing countries, especially Japan and North Europe, populations are ageing. Meanwhile, an ever-greater amount of social life is moving online, more women are entering the workforce, and millennials’ purchasing power is increasing.

Industry 2.0Mass production assembly lines using electrical power

Industry 1.0Mechanization and the introduction of steam and water power

Industry 3.0Automated production, IT systems, and robotics

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Some parts of this megatrend are more investable than others. The major winners of social life moving online have been Facebook, Apple, Netflix, Google and the other so-called “FANG” stocks. Facebook and Google have replaced newspapers as the primary distributors of information and cannibalised their business models (selling audiences to advertisers). Women entering the workforce has caused a booming day-care industry (and the companies that house them such as the Arena REIT and Charter Hall).

Demographic changes promise to create winners and losers, however, investment opportunities at this stage are less straightforward. India and China collectively have 1 billion young people, most of which are heavy internet users thanks to smartphone availability. This creates a strong runway for the digital economy in emerging markets. Meanwhile, aging populations have meant Japan buys more adult nappies than children’s nappies.

“ Meanwhile, aging populations have meant Japan buys more adult nappies than children’s nappies.”

Aging populations have consequences for robotics and automation (discussed above), which will be required to meet labour shortfalls and likely consequences for healthcare, which we discuss below.

Source: World Bank, 27 July 2021

POPULATION AGES 65 AND ABOVE (% OF TOTAL POPULATION)

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Healthcare and wellness are another megatrend. Healthcare has received a huge amount of attention recently thanks to Covid-19, which has also highlighted the miracles of mRNA technology. However, the healthcare megatrend pre-existed the pandemic and will outlive it. Wellness meanwhile refers to the growing concern with diet, exercise and lifestyle that has developed in developed countries.

Healthcare spending is growing faster than GDP in most countries, data from the World Health Organisation indicates. This means that that the healthcare sector is taking an increasingly large share of the global economy. Most of the growth owes to government support, which is substantial and increasing.

Governments’ hands have been forced into greater healthcare spending. As discussed above, in rich countries, populations are growing older. Caring for the elderly forms the backbone of healthcare expenditure globally.

But perhaps more problematically, obesity is climbing in many western countries. According to the World Health Organisation, the percentage of overweight adults is approaching 40% globally. Healthcare problems stemming from obesity are manifold, including heart conditions, diabetes, and some cancers. Whatever the underlying reasons obesity and a growing number of elderly create demand for healthcare.

Meanwhile, healthcare technologies are also improving, tying into the first megatrend. Biotechnology has been a major area of development, as we have seen with the mRNA vaccines that are being used to vaccinate the world from coronavirus. mRNA vaccines coach patients’ immune systems into building the worst bits (“spike proteins”) of viruses and cancers and learn to fight them that way. Genomics, which uses individuals’ DNA to tailor medical treatment, is another emerging prospect.

Source: WHO, 21 July 2021

HEALTHCARE SPENDING (% OF GDP)

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Environmental and resource scarcity is the most alarming megatrend. Last time carbon dioxide concentrations in the atmosphere were as high as they are today, sea levels were 20 metres higher. As global warming shrinks cloud coverage and rainfall, water flows into catchment areas globally are declining, threatening droughts and lower crop production. This means that a transition away from fossil fuels is timely and necessary.

While the worst-case scenarios for global warming are terrifying, there are also investment opportunities for those willing to put their capital into building the future. One example has been battery technology. Batteries are essential for sustainable energy, as they store the electricity produced by wind, solar and hydro. Renewables are receiving renewed attention and government subsidies thanks to the Biden administration in the US and its recommitment to the Paris Accords.

Other examples include water recycling and desalination to offset lower water inflows from declining rainfall. Clean tech also lowers our dependence on fossil fuels in other parts of the economy. One example may be replacing single-use plastic packaging with biodegradable alternatives. As more governments make the shift to ban single-use plastics, more biodegradable alternatives emerge on the market.

RENEWABLE ELECTRICITY CAPACITY ADDITIONS

Source: WHO, IEA, 11 May 2021

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ACCESS MEGATRENDS WITH THEMATIC ETFSMegatrends can offer investors a lot. But accessing them has not always been straightforward. Previously, investors would have to either identify the trend, research it themselves, do all the work identifying potential winners, then go buy them. Some funds, like hedge funds, did provide these strategies to their clients. But these types of funds, however, were unavailable to most investors.

With the rise of thematic ETFs, however, megatrend investing has become more readily available. Thematic ETFs are a new arrival in Australia. While they have been available for some time in the US and Europe, they have only come to Australian shores in the past few years. Nonetheless, in a short space of time they have become a popular tool for investors, advisers and institutions. In the six months to June 2021, their funds under management grew more than 35%, ASX data indicates.

Thematic ETFs work like the familiar ETFs and index funds: they follow indexes. However, the indexes they track are devised specifically to target megatrends. The indexes are usually more detailed, specific and research intensive than the household name indexes like the ASX 200 or Nasdaq 100. They can in some instances be built by research houses or consultancies with specialist knowledge of a megatrend.

Source: ASX, ETF Securities, 1 July 2021

THEMATIC ETFs ON THE ASX (TOTAL FUM)

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WHAT CAN THEMATIC ETFS OFFER INVESTORS?Thematic ETFs can be used in several ways, depending on the outcomes investors are targeting. We see them having five potential uses. They are:

1. Access to long term growth trends, potentially offering outperformance;

2. An educational journey and the chance to learn;

3. More flexibility in defining sectors;

4. Hedges against disruption, and its impact on portfolios;

5. More targeted exposure than broad market indexes like the Nasdaq or S&P.

1. ACCESSING GROWTHThe access to long term growth trends is the primary reason investors turn to megatrends. For those with the conviction, patience, and willingness to take the risk, megatrend investing can offer outperformance. On this score, it is important for investors to have the belief that the megatrend in question exists. Without the conviction, it is difficult to stomach periods of underperformance, which can be sustained. It is also crucial that investors distinguish between a megatrend on the one hand, and fads and cycles on the other. If a megatrend is to deliver outperformance, then economic support must be structural and sustained.

2. THE CHANCE TO LEARNMegatrends and thematic ETFs can help investors build a better understanding of the world around them. A lot of investing can be insular and abstract, conferring no benefits to investors outside the wealth it builds for them. Index investing pioneer Jack Bogle boasted that an S&P 500 index fund allowed investors to “set and forget”. However, thematic ETFs can offer a very different and potentially very educational experience. As thematic ETFs are often at the frontier of societal and technological change, there is a lot of educational work that can come with them. This can give investors the chance to learn things that benefit them elsewhere in life while also broadening their investment horizons.

3. MORE FLEXIBILITY IN DEFINING SECTORSOfficially, there are 11 sectors. These official sectors were defined by MSCI and S&P Global under their global industry classification system (GICS) in the 1990s. Prior to GICS, investors were free to define sectors as they saw fit. The GICS regime introduced standardisation and clarity to sector definitions. However, the GICS sectors are not perfect: they can be inflexible and arbitrary. Real estate, for example, was not included as a GICS sector until 2014.

Investors will often have their own opinions of what a sector is. An advantage of thematic ETFs is that they provide greater flexibility for defining sectors. They give investors more power in deciding for themselves where lines should be drawn and another tool for building portfolios.

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Source: Bloomberg, 1 July 2021

Source: Bloomberg, 1 July 2021

TESLA STRONGLY OUTPERFORMED TO S&P 500 INCLUSION...

...BUT HAS UNDERPERFORMED SINCE

4. HEDGES AGAINST DISRUPTIONDisruption typically comes from many places and can come unexpectedly. It can lay ruin to sectors of the economy and destroy much wealth in the process, as the internet did with the old media. Some investors can use thematic ETFs to take a view on potential disrupters. Not in order to seek outperformance, but

instead to protect against the threat of disruption in other parts of the portfolio. For instance, Australian investors heavily exposed to coal, oil and gas, may buy a battery technology ETF to diversify and hedge against disruption to fossil fuels.

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5. MORE TARGETED EXPOSURE THAN BROAD INDEXESInvestors have developed a passion for broad market weighted indexes in recent years, due to the well-publicised failures of active managers. ETFs tracking popular benchmark gauges like the S&P 500 have seen huge inflows. However, these broad market indexes are a bit of a blunt instrument, and don’t offer the targeted exposures to themes and high growth areas that thematics can provide. A good example recently has been Tesla. Tesla was a stock that featured heavily in thematic ETFs, due to its future-oriented business model. However, it was excluded from the S&P 500 until the very end of 2020. According to consultancy Research Affiliates, S&P 500 investors have experienced none of the upside that Tesla has provided.

COMMON CRITICISM: THEMATIC ETFS BUY OVERPRICED GROWTH STOCKSInvestors sometimes criticise thematic ETFs for buying expensive glamour stocks, whose valuations have stretched too far. While they often agree with the megatrend a thematic ETF is targeting, they think that the market is already aware of the megatrend and has already “priced it in” to a thematic ETF’s underlying shares (often overoptimistically). Tesla has featured prominently in criticism to this effect in recent years, with many investors saying that Tesla is a “bubble”. This line of criticism is often extended to argue that investors are better off buying into “value” stocks, which are companies that trade on lower price-to-book or price-to-earnings. Or simply buying a passive market weighted index fund like the S&P 500 and not taking any long-term views.

Source: Kenneth French, 31 March 2021, For chart details see endnote on page 19 1

GROWTH STOCKS THAT SURPRESS PROFITS HAVE OUTPERFORMED

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Secondly, investors must ask how the thematic ETF targets the megatrend. Does a thematic ETF offer true to label exposure to this megatrend? How does it go about identifying the companies driving a trend? How are they weighted when they are purchased? What is the overlap between this fund and any other funds or ETFs an investor might already have? A good thematic ETF should give true to label exposure, have a process for picking the right companies, and not hug a famous benchmark.

Thirdly, investors must ask if the fund aligns with their values. As investors globally take ethical and environmental factors into consideration, a question to ask of thematic ETFs is whether they incorporate considerations such as these.

HOW TO SELECT A THEMATIC ETFWhen selecting thematic ETFs, investors need to ask a series of questions. First and foremost is about the megatrend the ETF aims to target. Do investors find the megatrend convincing? How sustainable is the growth? And what does the evidence and data say about the theme? Markets move down and up. And drawdowns and bear markets are always easier to stomach if investors have conviction in the theme.

BROAD > SECTOR > THEMATIC

There’s much to say about this line of critique. The most important of which is that buying expensive looking “growth” stocks has been the winning strategy the past 10 years. According to data from Kenneth French, a business professor at Dartmouth, stocks that suppress profits in favour of future growth – such as Facebook, Amazon, Netflix and Google (the “FANGs”) – has been an especially successful investment strategy.

The other note is that cheap stocks are usually cheap for a good reason: fewer people want to own them. This in turn typically reflects their lack of growth prospects or dim futures. Relatedly, just because a company’s share price looks expensive, does not mean it cannot rise further. The rich can and do get richer. The rise of Afterpay up the ASX boards in recent years has been a reminder of this on our home soil (with “value” investors wrongly warning of an Afterpay bubble all the way).

BiotechnologyETFS S&P Biotech ETFASX Code: CURE

Climate Change: Battery Technology and Electric CarsETFS Battery Tech & Lithium ETFASX Code: ACDC

Robotics, Automation and Artificial IntelligenceETFS ROBO Global Robotics and Automation ETFASX Code: ROBO

Pure Sector - GlobalETFS Morningstar Global Technology ETF ASX Code: TECH

Broad-BasedETFS FANG+ ETFASX Code: FANG

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ETF SECURITIES’ THEMATIC ETFS: INVEST IN MEGATRENDSETF Securities is the second oldest ETF provider in Australia. We are one of the pioneers of thematic investing and provide several thematic ETFs. When launching ETFs, we look for points of overlap between megatrends. We believe that when megatrends converge, they can make for very powerful investment forces.

For example, our biotech ETF (CURE) targets the society and lifestyle megatrend (given the aging population) but also the health and wellness megatrend (governments are investing in biotech, including Australia’s in CSL, in order to improve national health outcomes). Battery technology is another example. This is an area of technological breakthrough but is also of direct significance for the environment. Our TECH fund, for its part, provides access to several themes, including cybersecurity, cloud technology and self-driving cars. Meanwhile FANG uses a megatrend strategy – targeting household names in innovation – that has been popularised by a famous active manager.

WHERE THEMATIC ETFS FIT IN A PORTFOLIO1. CORE OF A PORTFOLIOFor investors with longer time horizons, and greater risk tolerance, thematic ETFs can go in the core of a portfolio as a long-term strategic allocation as modelled in Portfolio C: Thematics as a Core. In this way, investors can hope to minimise timing risk with megatrends and hopefully participate in the growth, which may or may not be above the broad stock market.

NASDAQ 100 INDEX

S&P 500 INDEX

ASX 200 INDEX

MSCI ACWI INDEX

FANG 36.6% 17.9% 0 10.0%

ROBO 7.2% 3.8% 0 3.2%

ACDC 3.9% 2.4% 0.6% 2.0%

TECH 16.5% 9.1% 0.6% 5.4%

STOCK OVERLAP (ETF VS BROAD BASED INDEX)

Source: Morningstar, 30 June 2021

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Thematic ETFs can also be piled atop one another at the core of a portfolio, to broaden the number of megatrends a portfolio has exposure to. This is possible as there is typically very little overlap between thematic ETFs, as their portfolios are usually

Thematic ETFs can also take the place of active managers or can take the place of some of their global equity exposure with thematic exposure. Modelling we have done suggests that having held FANG, TECH and

concentrated and bespoke. Relatedly, there is often little overlap between a thematic ETF and the broad market (see above), meaning they can be placed next to total market index funds as well.

ROBO in the core of a portfolio would have enhanced the risk-adjusted returns of an Australian portfolio throughout their trading history.

CORRELATION FANG ROBO ACDC TECH

FANG 1

ROBO 0.63 1

ACDC 0.55 0.77 1

TECH 0.66 0.86 0.75 1

Source: Morningstar, 30 June 2021

PORTFOLIO A: TRADITIONAL PORTFOLIO

International Shares (MSCI ACWI Index)

48%

International Shares Hedged (MSCI ACWI Index)

30%

Emerging Markets (MSCI Emerging Markets Horizon Index)

10%

Small Caps (MSCI World Small Cap Index)

12%

PORTFOLIO B: THEMATICS AS A SATELLITE

International Shares 34%

International Shares Hedged

30%

Emerging Markets 7%

Small Caps 9%

TECH 10%

ROBO 10%

PORTFOLIO C: THEMATICS AS A CORE

FANG 20%

TECH 10%

ROBO 10%

International Shares Hedged

30%

Emerging Markets 10%

Balacing Satelilite (s) (S&P Global Divided Aristocrates Index)

20%

GLOBAL EQUITY PORTFOLIO FRAMEWORK

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RETURN VOLATILITYSHARPE RATIO

MAX DRAWDOWN

MAX DRAWDOWN VALLEY DATE

Portfolio A: Traditional Portfolio

12.77% 11.59% 0.60 -17.71% 31/03/2020

Portfolio B: Thematics as a Satellite

15.04% 11.82% 0.73 -16.22% 31/03/2020

Portfolio C: Thematics as a Core

17.48% 11.64% 0.92 -13.50% 31/03/2020

2. SATELLITE IN A PORTFOLIOThematic ETFs are mostly used as satellites, this scenario is modelled in Portfolio B: Thematics as a Satellite. Here, investors use them to express a medium to long term view and make a smaller allocation to them than they would to core allocations. By taking them as satellites, investors can wait more patiently than they would if they were simply buying them as tilts or side bets.

Our modelling also indicates that satellite holdings can improve portfolios.

Source: Morningstar, 31 March 2021Please note past performance is not a reliable indicator of future performance

Source: Morningstar, 31 March 2021Please note past performance is not a reliable indicator of future performance

For chart details see endnote on page 19 2

THEMATICS IN PORTFOLIOS INVESTMENT GROWTH

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CONCLUSIONMegatrends will always remain critical to the evolution of society. Through identifying megatrend groupings across transformative technology, healthcare & wellness, society & lifestyle and environment & resources, ETF Securities has created the Future Present product range of thematic ETFs. These ETFs are specifically designed to provide investors the ability to capture long-term growth trends within their portfolio. ETF Securities remains committed to developing innovation-led solutions for our clients to achieve better investment outcomes.

ASX CODE FUND NAME DESCRIPTION

TECHETFS MORNINGSTAR GLOBAL

TECHNOLOGY ETF

Invests in a concentrated portfolio of technology companies, judged by Morningstar to have strong competitve positions and attractive valuations.

ACDC ETFS BATTERY TECH & LITHIUM ETFInvests in battery technology companies across the value chain and in lithium miners.

ROBOETFS ROBO GLOBAL ROBOTICS

AND AUTOMATION ETF

Tracks the famous ROBO Global Index, which invests in robotics, automation and artificial intelligence companies.

FANG ETFS FANG+ ETF

Provides exposure to the 10 mega-growth tech companies: Facebook, Amazon, Apple, Netflix, Google, Tesla, Nvidia, Alibaba, Twitter, Baidu.

CURE ETFS S&P BIOTECH ETFInvests in US healthcare biotech companies on an equal weighted basis.

3. ALPHA TILT Less frequently, investors use thematic ETFs for smaller side bets or alpha tilts. Here, thematic ETFs are usually held for the short or medium term, with investors darting in and out based on macroeconomic views, technical, sector fundamentals, or some other variable.

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ENDNOTESGROWTH STOCKS THAT SUPPRESS PROFITS HAVE OUTPERFORMED1 Data as of March 31, 2020 and accessed on April 17, 2021. Portfolios are indexed to 100 as of October 31,

2010. Portfolios are built from data compiled by Dartmouth professor Kenneth R. French, which in turns draws on the CRSP database of companies listed on US exchanges. Prof French creates these portfolios by sorting companies into quintiles based on their operating profit and book-to-market-ratio (BtM).The low-profit growth portfolio shows the lowest quintile companies based on BtM and operating profit. The high-profit value portfolio shows the top quintile companies based on BtM and operating profit. The data can be accessed at: https://mba.tuck.dartmouth.edu/pages/faculty/ken.french/data_library.html. Source: ETF Securities calculations, with data taken from Ken French’s website at Dartmouth College. Please note past performance is not a reliable indicator of future performance.

THEMATICS IN PORTFOLIOS: INVESTMENT GROWTH2 Data as of 31 March 2021. The Base Case portfolio is made from a blend of four indexes: MSCI ACWI Index

(48%), AUD Hedge MSCI ACWI Index (30%), MSCI Emerging Markets Horizon Index (10%), MSCI World Small Cap Index (12%). These same indexes have their percentages reduced to 34%, 30% 7% and 9% respectively in the Base case + 20% thematics portfolio, with the ETFS Morningstar Global Technology ETF 10% and ETFS ROBO Global Robotics and Automation ETF 10%, where the ETF performance calculations are based on the funds’ daily net asset values. The Core portfolio is made of the ETFS FANG+ ETF 20%, ETFS Morningstar Global Technology ETF 10%, ETFS ROBO Global Robotics and Automation ETF 10%, MSCI ACWI Index 30%, MSCI Emerging Markets Horizon Index 10%, S&P Global Dividend Aristocrats Index 10%. Source: Morningstar, ETF Securities calculations. Please note past performance is not a reliable indicator of future performance.

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Disclaimer

This document is issued by ETFS Management (AUS) Limited (“ETFS”) (Australian Financial Services Licence Number 466778). This document may not be reproduced, distributed or published by any recipient for any purpose. Under no circumstances is this document to be used or considered as an offer to sell, or a solicitation of an offer to buy, any securities, investments or other financial instruments.

The information provided in this document is general in nature only and does not take into account your personal objectives, financial situations or needs. Before acting on any information in this document, you should consider the appropriateness of the information having regard to your objectives, financial situation or needs and consider seeking independent financial, legal, tax and other relevant advice having regard to your particular circumstances. Any investment decision should only be made after obtaining and considering the relevant product disclosure statement.

This document has been prepared by ETFS from sources which ETFS believes to be correct. However, none of ETFS, ETFS Capital Limited, nor any other member of the ETFS Capital Group, nor any of their respective directors, employees or agents make any representation or warranty as to, or assume any responsibility for the accuracy or completeness of, or any errors or omissions in, any information or statement of opinion contained in this document or in any accompanying, previous or subsequent material or presentation. To the maximum extent permitted by law, ETFS and each of those persons disclaim all any responsibility or liability for any loss or damage which may be suffered by any person relying upon any information contained in, or any omissions from, this document.

Investments in any product issued by ETFS are subject to investment risk, including possible delays in repayment and loss of income and principal invested. Neither ETFS, ETFS Capital Limited nor any other member of the ETFS Capital Group nor any of their respective directors, employees or agents guarantees the performance of any products issued by ETFS or the repayment of capital or any particular rate of return therefrom.

The value or return of an investment will fluctuate and an investor may lose some or all of their investment. Past performance is not a reliable indicator of future performance.

ACDC - The financial instrument is not sponsored, promoted, sold or supported in any other manner by Solactive AG nor does Solactive AG offer any express or implicit guarantee or assurance either with regard to the results of using the index and/or Index trademark or the Index Price at any time or in any other respect. The Index is calculated and published by Solactive AG. Solactive AG uses its best efforts to ensure that the Index is calculated correctly. Irrespective of its obligations towards the Issuer, Solactive AG has no obligation to point out errors in the Index to third parties including but not limited to investors and/or financial intermediaries of the financial instrument. Neither publication of the Index by Solactive AG nor the licensing of the Index or Index trademark for the purpose of use in connection with the financial instrument constitutes a recommendation by Solactive AG to invest capital in said financial instrument nor does it in any way represent an assurance or opinion of Solactive AG with regard to any investment in this financial instrument. Solactive AG will not be responsible for the consequences of reliance upon any opinion or statement contained herein or for any omission.

CURE - Standard & Poor’s S&P Indices are trademarks of Standard & Poor’s Financial Services LLC. “S&P”, as used in the term S&P 500, is a trademark of Standard & Poor’s Financial Services LLC (“S&P”) respectively and has been licensed for use by ETFS. ETFS products are not sponsored, endorsed, sold or promoted by S&P, and S&P does not make any representation regarding the advisability of investing in ETFS products.

FANG - The value or return of an investment will fluctuate and investors may lose some or all of their investment. Past performance is not an indication of future performance. Source ICE Data Indices, LLC, is used with permission. “FANG+ SM/Ò” is a service/ trademark of ICE Data Indices, LLC or its affiliates and has been licenced, along with the FANG+ Index (“Index”) for use by ETFS Management (AUS) Limited (“ETFS”) in connection with ETFS FANG+ ETF (the “Product”). Neither ETFS nor the Product, as applicable, is sponsored, endorsed, sold or promoted by ICE Data Indices, LLC, its affiliates or its Third-Party Suppliers (“ICE Data and its Suppliers”). ICE Data and its Suppliers make no representations or warranties regarding the advisability of investing in securities generally, in the Product particularly, the Trust or the ability of the Index to track general market performance. Past performance of an Index is not an indicator of or a guarantee of future results.

ICE DATA AND ITS SUPPLIERS DISCLAIM ANY AND ALL WARRANTIES AND REPRESENTATIONS, EXPRESS AND/OR IMPLIED, INCLUDING ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, INCLUDING THE INDICES, INDEX DATA AND ANY INFORMATION INCLUDED IN, RELATED TO, OR DERIVED THEREFROM (“INDEX DATA”). ICE DATA AND ITS SUPPLIERS SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY WITH RESPECT TO THE ADEQUACY, ACCURACY, TIMELINESS OR COMPLETENESS OF THE INDICES AND THE INDEX DATA, WHICH ARE PROVIDED ON AN “AS IS” BASIS AND YOUR USE IS AT YOUR OWN RISK.

ROBO - The value or return of an investment will fluctuate and investors may lose some or all of their investment. Past performance is not an indication of future performance. “ROBO Global” is a trademark of ROBO Global, LLC and has been licenced for use for certain purposes by ETFS. The ROBO Global Robotics & Automation Index (The “Index”) is calculated by Solactive AG. Neither the licensing of the trademark by ROBO Global, LLC nor the calculation and publication of the Index by Solactive AG constitutes a recommendation by ROBO Global, LLC or Solactive AG (or their respective affiliates) to invest capital in any financial product. The EFTS ROBO Global Robotics and Automation ETF based on the Index is not sponsored, endorsed, sold or promoted by ROBO Global. LLC or its affiliates and neither ROBO Global, LLC nor any of its affiliates makes any representation regarding the advisability of trading in such product(s).

TECH - The Morningstar® Developed Markets Technology Moat Focus IndexSM was created and is maintained by Morningstar, Inc. Morningstar, Inc. does not sponsor, endorse, issue, sell, or promote the ETFS Morningstar Global Technology ETF and bears no liability with respect to that ETF or any security. Morningstar® is a registered trademark of Morningstar, Inc. Morningstar® Developed Markets Technology Moat Focus IndexSM is a service mark of Morningstar, Inc.

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