FactSet’s recent Thematic Momentum study argues that thematic ETFs should not be viewed only as long-horizon narrative vehicles. They are also expressions of rotating market leadership. The study’s baseline framework ranks U.S.-listed thematic ETFs with more than $100 million in AUM by 12-month total return, divides them into quintiles, and rebalances monthly. In that test, the top thematic quintile delivered a 21.2% annualized return, while the long-short spread between the top and bottom quintiles compounded at 25% annually. We think this is a great place to start understanding ETF performance trends, but we can get even more insight from comparing momentum to near term performance and flow data.
The latest return and flow data gives investors a useful real-time lens Factset’s momentum study conclusions. The tape broadly confirms the thematic momentum thesis: leadership is concentrated, dispersion is wide, and several themes are outperforming broad market exposure by a meaningful margin. But the flow tape adds a second layer. Flows help distinguish confirmed leadership from crowded leadership, early rotation, and fading sponsorship.
That distinction matters because thematic investing is once again attracting significant attention. Morningstar reported that global thematic fund assets reached $779 billion in Q3 2025, a three-year high, while noting that regional flows remain mixed. BlackRock similarly notes that assets in U.S.-listed thematic funds grew nearly 11x over the last decade through the end of 2025, and emphasizes that themes are dynamic and often connect companies that traditional sector classifications treat as unrelated. That backdrop reinforces FactSet’s core point: thematic momentum can capture information that sector momentum alone may miss.
Return and flow read across popular thematic categories
Source for table: FactSet latest return and flow data. Category returns are AUM-weighted; flows are aggregated by category and shown as a percentage of category AUM.
| Thematic category | Category AUM | 6M return | 1M return | Flow intensity: 1M / YTD / 1Y | Momentum and flow read |
| Natural Resources | $247.3B | +25.5% | +2.1% | -0.8% / -1.9% / +7.4% | Performance-led, but near-term flows diverge |
| Semiconductors | $107.0B | +74.0% | +31.7% | +0.1% / +6.9% / +11.8% | Strongest price momentum; flows lag the move |
| Robotics & AI | $38.5B | +33.4% | +21.9% | +4.3% / +12.0% / +44.5% | Strong confirmation from returns and flows |
| Software | $32.7B | -7.2% | +16.0% | +3.3% / +16.9% / +5.3% | Potential early reversal; not yet confirmed by 6M trend |
| Internet & Metaverse | $15.4B | -9.2% | +7.5% | +5.2% / -8.9% / -4.4% | Short-term repair, longer-flow weakness |
| Electrification | $12.7B | +29.1% | +9.2% | +13.6% / +36.5% / +59.2% | Flow-confirmed momentum |
| Uranium Reactors | $8.3B | +15.1% | +3.8% | +5.5% / +20.7% / +50.8% | Flow-led conviction; needs price follow-through |
| Clean Energy | $5.2B | +31.9% | +17.0% | +8.0% / +3.8% / +9.8% | Recent return momentum with improving flow support |
| Blockchain | $4.0B | +14.9% | +20.9% | +9.6% / +6.0% / +20.5% | Short-term rotation with flow support |
| Space Exploration | $2.0B | +47.4% | +8.8% | +22.4% / +49.5% / +59.1% | Strongest flow-confirmed smaller-category trend |
The table highlights the main conclusion: thematic momentum remains intact, but investor sponsorship is uneven. Space Exploration, Electrification, Robotics & AI, Clean Energy, and Blockchain show alignment between returns and flows. These are the cleaner confirmations. Price momentum is present, flows are supportive, and investor interest appears to be reinforcing rather than resisting the trend.
Semiconductors are the most important divergence. In the latest return and flow data, the category is the clear performance leader, with a 74.0% six-month return and a 31.7% one-month return. Yet one-month flow intensity is only 0.1% of AUM. That does not make the semiconductor trend weak. It does suggest that returns have moved faster than fresh category-level capital formation.
External research supports the fundamental backdrop for semiconductor strength. The Semiconductor Industry Association reported that global semiconductor sales reached $791.7 billion in 2025, up 25.6% from 2024, and cited AI, IoT, 6G, autonomous driving, and related technologies as drivers of continued chip demand. Morningstar’s April ETF-flow analysis also found that technology ETFs set a monthly inflow record, with semiconductor strength playing a major role. The constructive interpretation is that semiconductor momentum remains powerful, but the flow signal should be monitored for signs of exhaustion or rotation into adjacent AI beneficiaries.
Those adjacent beneficiaries are increasingly important. The AI theme is no longer just about chips. It is expanding into power, grid, infrastructure, nuclear, renewables, data centers, and automation. The International Energy Agency reported that data center electricity demand rose 17% in 2025, while AI-focused data center demand rose even faster; it also expects data center electricity consumption to double by 2030. In its energy supply analysis, the IEA projects electricity generation for data centers rising from 460 TWh in 2024 to more than 1,000 TWh in 2030, with renewables meeting nearly half of incremental demand and nuclear becoming more important later in the decade.
That helps explain the alignment in Electrification, Clean Energy, Uranium Reactors, and Robotics & AI. The AI trade is broadening from compute to the infrastructure required to support compute. Electrification’s strong flow intensity, Uranium’s large one-year flow/AUM, and Clean Energy’s improving recent performance all point to the same underlying theme: investors are beginning to price the physical constraints of the digital economy.
Natural Resources show a different kind of divergence. The category has strong six-month performance, but one-month and YTD flows are negative. That is price momentum without near-term flow confirmation. The constructive view is that natural resources may still be benefiting from commodity demand, infrastructure spending, and inflation hedging. The risk is that outflows could signal profit-taking or reduced investor conviction. Investors should watch whether one-month and three-month performance begin to deteriorate. If returns weaken while outflows persist, the theme could move from leadership to distribution.
Software and Internet & Metaverse are the opposite setup. Both remain negative over six months, which means they are not yet confirmed intermediate-term momentum leaders. But both show positive one-month returns and positive one-month flow intensity. FactSet’s study is useful here because it finds that while 12-month momentum is the strongest longer-term signal, one-month thematic momentum can help capture sudden rotations. These categories may represent early-stage repair trades. The key is whether short-term improvement turns into sustained three-month and six-month strength.
Uranium Reactors are more flow-led than performance-led. One-year flow intensity is above 50%, and YTD flow intensity is above 20%, but six-month returns are positive rather than dominant. That makes Uranium a useful case study in thematic anticipation. Flows may be early, but they still need price confirmation. If returns accelerate, the inflows will look prescient. If performance stalls and flows cool, the category may have attracted capital before the return signal was ready.
FactSet’s study also emphasizes implementation discipline. Monthly rebalancing matters because themes rotate quickly; the study finds that moving from monthly to annual rebalancing sacrifices about half of the quintile spread over the test period. That is highly relevant to the latest return and flow data. Several categories are already sending mixed signals beneath the surface, and slow monitoring risks leaving investors anchored to stale leadership.
Constructive conclusions for investors
First, performance momentum remains the primary signal. Flows are useful, but they should not replace returns. The strongest thematic momentum opportunities are still identified by relative performance leadership.
Second, flow intensity is a confirmation tool. Flows should be normalized by AUM. A smaller category such as Space Exploration can show meaningful investor sponsorship through flows that would look modest in absolute dollar terms but are substantial relative to the asset base.
Third, divergence is often the most useful information. Semiconductors show returns ahead of flows. Uranium shows flows ahead of returns. Software shows short-term repair before six-month confirmation. Natural Resources show strong performance with recent outflows. Each divergence points to a different question investors should be asking.
Fourth, watch rotation within megatrends, not just between megatrends. AI leadership may rotate from chips into software, robotics, grid infrastructure, uranium, electrification, and clean energy. A cooling in one part of the AI complex does not necessarily mean the AI theme is over; it may mean the market is repricing the next bottleneck.
Finally, trend change is most likely to appear first in the relationship between one-month returns, three-month returns, and flow intensity. A leader with weakening short-term returns and fading inflows may be losing sponsorship. A laggard with improving short-term returns and renewed inflows may be entering a new rotation window.
The latest return and flow data does not undermine FactSet’s thematic momentum framework. It makes the framework more actionable. Returns identify leadership. Flows reveal sponsorship. Divergence reveals where the next rotation may be forming.
Sources
- FactSet Research Systems Inc. — Stephen Malinak, Ph.D., Thematic Momentum Strategies: Enhancing Returns Using Momentum-Based Rotation and Thematic Performance Drivers. Uploaded research paper; source for FactSet’s recent Thematic Momentum study, including the thematic momentum framework, quintile backtests, lookback/rebalance analysis, and RBICS-based thematic performance drivers.
- FactSet — Latest return and flow data. Uploaded 5/14 data set; source for category AUM, AUM-weighted returns, aggregate flows, and flow/AUM intensity used in the table and category comparisons.
- Morningstar — Thematic Funds Landscape: The Latest Trends for Asset Managers. Source for broader context on global thematic fund assets and recent thematic fund industry trends.
- BlackRock — Thematic Investing: Tomorrow’s Themes, Today. Source for broader context on U.S.-listed thematic fund growth and the cross-sector nature of thematic investing.
- ETF.com — Top Thematic ETFs: Best Funds for Theme Investing in 2026. Source for current thematic ETF category context and popular investor-favored themes.
- Semiconductor Industry Association — Global Annual Semiconductor Sales Increase 25.6% to $791.7 Billion in 2025. Source for semiconductor demand backdrop and AI-related chip-cycle context.
- International Energy Agency — Data centre electricity use surged in 2025 and Energy demand from AI. Sources for AI/data-center electricity demand, power infrastructure, and energy-supply context relevant to electrification, uranium, and clean-energy themes.
- Morningstar — The Semiconductor Rally Lifted April ETF Flows to $167 Billion. Source for ETF-flow context around technology and semiconductor demand.
Disclaimer
This article is provided for informational and educational purposes only and should not be construed as investment advice, research, a recommendation, or an offer or solicitation to buy, sell, or hold any security, fund, ETF, strategy, or other financial instrument. Any references to thematic categories, ETF performance, fund flows, or investment trends are illustrative and should not be relied upon as the basis for an investment decision.
The analysis is based on FactSet data, including FactSet’s recent Thematic Momentum study, Thematic Momentum Strategies: Enhancing Returns Using Momentum-Based Rotation and Thematic Performance Drivers by Stephen Malinak, Ph.D., and FactSet’s latest return and flow data. FactSet’s research paper states that its information is provided “as is,” is for informational purposes, does not constitute investment advice, and is not a solicitation or offer to buy or sell securities.
Past performance, including historical, hypothetical, or backtested results, is not indicative of future results. Momentum-based, thematic, and sector-rotation strategies may involve heightened risks, including concentration risk, volatility, liquidity constraints, crowding risk, rapid trend reversals, and sensitivity to macroeconomic, regulatory, technological, and market-cycle changes. Fund flows may not predict future performance and may reflect investor behavior, product availability, market structure, or short-term sentiment rather than durable investment conviction.
All opinions and interpretations expressed in the article are those of the author and are subject to change without notice. Data from FactSet and other third-party sources is believed to be reliable, but accuracy, completeness, and timeliness are not guaranteed. Investors should conduct their own due diligence and consult a qualified financial, legal, or tax advisor before making any investment decisions.
