May Review
The Kaleidoscope Thematic Equity Model had a strong May, outperforming SPY as AI, cybersecurity, cloud, semiconductors, blockchain, and select clean-energy themes led the market. The model returned +10.17% MTD versus SPY up +5.26%, producing +4.75% of active return.
The broader tape was supportive for thematic growth. StreetAccount noted that U.S. equities advanced again in May, with the S&P 500 +5.15% and Nasdaq +8.36%, while Technology was the clear sector leader at +15.91%. Semis/memory, software, tech hardware, networking, industrial metals, life sciences, and quantum computing were among the major outperformers.
Model Performance and Attribution
| Metric / Holding | May MTD Return or Active Contribution |
| Kaleidoscope Thematic Equity Model | +10.17% |
| Benchmark: SPY | +5.26% |
| Active Return | +4.75% |
| AIQ | +1.58% |
| CIBR | +1.27% |
| BKCH | +1.25% |
| SKYY | +0.80% |
| SMH | +0.76% |
| TAN | +0.39% |
| ARKQ | +0.30% |
| KWEB | -0.50% |
| GBTC | -0.41% |
| URA | -0.27% |
| NANR | -0.24% |
| ITB | -0.22% |
The month’s attribution was concentrated in technology and blockchain exposure. AIQ, CIBR, BKCH, SKYY, and SMH accounted for the bulk of the model’s active return, reflecting continued strength in AI infrastructure, cybersecurity, cloud, semiconductors, and crypto-equity themes.
The primary detractors were KWEB, GBTC, URA, NANR, and ITB, reflecting weakness in China internet, Bitcoin-linked exposure, uranium/natural resources, and housing-related themes.
Sleeve Attribution
| Sleeve | Holdings | May Active Contribution |
| Technology Themes | AIQ, ARKQ, CIBR, SKYY, SMH, KWEB, FDN | +4.33% |
| Consumer Themes | XBI, ARKF, GBTC, BKCH, ITB, DRIV, ESPO, PEJ | +0.59% |
| Industrial Themes | GRID, ARKX, PAVE, IGF, TAN, PHO | +0.07% |
| Commodities Themes | NANR, COPX, GDX, MLPX, URA | -0.28% |
Technology was the clear driver of outperformance. Consumer themes were also positive, helped by BKCH and DRIV, though GBTC and ITB were drags. Industrial themes were mixed, with TAN and ARKX offset by infrastructure and water exposure. Commodities themes were the only negative sleeve.
Thematic ETF Performance and Flow Trends
According to the Kaleidoscope Thematic Return and Flow Database, using FactSet Research Systems Inc. data, May flows were strongest in industrial and electrification themes, while technology performance was strong despite mixed flows.
| Sleeve | Avg. 1M Return | May Flow | May Read-Through |
| Technology Themes | +16.3% | -$761M | Strong returns; SMH outflows masked AI/cyber/cloud inflows |
| Industrial Themes | +8.9% | +$2.04B | GRID, PAVE, IGF and TAN attracted capital |
| Consumer Themes | +8.2% | -$226M | BKCH and DRIV helped; XBI and ARKF saw outflows |
| Commodities Themes | +4.2% | -$547M | COPX performed well, but GDX and natural-resource flows were negative |
Flow totals reflect available ETF flow fields in the return and flow file.
Top May Flow Winners and Losers
| Top May Flow ETFs | Theme | May Flow | 1M Return | ||||
| GRID | Electrification | +$1.18B | +4.8% | ||||
| AIQ | Robotics & AI | +$409M | +22.3% | ||||
| PAVE | Infrastructure | +$350M | +2.1% | ||||
| KWEB | China Internet | +$292M | -4.6% | ||||
| IGF | Infrastructure | +$230M | +0.1% | ||||
| TAN | Solar / Clean Energy | +$208M | +31.7% | ||||
| CIBR | Cybersecurity | +$208M | +31.2% | ||||
| Largest May Outflow ETFs | Theme | May Flow | 1M Return | ||||
| SMH | Semiconductors | -$1.61B | +19.9% | ||||
| GDX | Gold Miners | -$347M | +3.8% | ||||
| XBI | Biotechnology | -$304M | +6.0% | ||||
| FDN | Internet | -$197M | +8.0% | ||||
| COPX | Copper Miners | -$184M | +13.4% | ||||
| ARKF | Fintech | -$29M | +5.4% | ||||
The flow data were constructive but uneven. GRID and AIQ saw strong inflows, confirming investor demand for electrification and AI exposure. SMH was the key disconnect: it delivered strong performance but saw the largest monthly outflows, suggesting profit-taking rather than a deterioration in semiconductor leadership.
Market Backdrop
May was an AI- and momentum-led market. StreetAccount highlighted continued AI enthusiasm, intense compute demand, and expansive capex plans, while also noting that investors remained focused on monetization and ROI timing. The monthly recap also flagged strong software performance and continued strength in semis/memory.
The weekly recap reinforced the same theme: momentum led again, semis rallied, and software earnings helped ease concerns around the “SAASpocalypse,” with SNOW, DELL, NTAP, DY, and MRVL cited among positive AI-linked updates.
Macro conditions were more mixed. StreetAccount noted persistent inflation concerns, weaker Treasuries during the month, a stronger dollar, lower WTI crude, and weaker Bitcoin futures. Those dynamics help explain the relative drag from energy, natural resources, and Bitcoin-linked exposure despite strong broader equity-market performance.
Model Interpretation
May was a strong relative month for the Kaleidoscope Thematic Equity Model. The model benefited from the exact areas leading the market: AI, cybersecurity, cloud, semiconductors, and blockchain equities. The main weakness came from non-U.S. internet, Bitcoin-linked exposure, uranium, natural resources, and housing.
The model’s YTD return is now +20.76%, compared with SPY up +11.24%, producing +9.05% of active return. The key setup into June is whether AI and tech leadership continues to broaden into adjacent themes such as infrastructure, electrification, cyber, automation, and space.
Bottom Line
The Kaleidoscope Thematic Equity Model outperformed materially in May, gaining 10.17% versus SPY up 5.26%. AIQ, CIBR, BKCH, SKYY, and SMH drove the positive attribution, while KWEB, GBTC, URA, NANR, and ITB were the main detractors.
The month confirmed that thematic leadership remains concentrated in AI-driven technology, but flows also showed meaningful investor demand for electrification, infrastructure, and clean-energy exposure.
Sources
- Kaleidoscope Thematic Equity Model Rolling Returns & Attribution, May 31, 2026; data from FactSet Research Systems Inc.
- Kaleidoscope Thematic Return and Flow Database, May 31, 2026; data from FactSet Research Systems Inc.
- StreetAccount Summary — U.S. Monthly Recap, May 2026; news and commentary from StreetAccount.
Disclaimer
This material is for informational purposes only and does not constitute investment advice, an offer to sell, or a solicitation to buy any security, ETF, or investment product. Model performance and attribution are based on historical data and are not indicative of future results. All investments involve risk, including possible loss of principal.
Returns, flows, attribution data, news, and market commentary referenced in the report are sourced from FactSet Research Systems Inc. and StreetAccount, unless otherwise noted. Data are believed to be reliable but have not been independently verified, and ETFThemes.com / Kaleidoscope Thematic Equity Model makes no representation as to their accuracy or completeness.
