Psychologie a chování
Buying a Thematic ETF at the Peak of Hype: Why Trendy Themes Disappoint
Key takeaways
- Thematic ETFs are most commonly launched at the peak of media attention — precisely when valuations are highest.
- FOMO pushes investors toward buying more expensive assets that already reflect the optimism.
- A good story is not the same as a good investment — price matters.
- Discipline, an investment plan, and regular DCA protect against hype-driven decisions.
- If a topic dominates front pages, it's probably too late for a favourable entry.
The biggest investment mistake associated with sector ETFs is not a poor sector choice — it's buying at the moment when everyone is talking about the sector, valuations are inflated, and media coverage is at its peak.
How the hype cycle works
Thematic ETFs have a specific lifecycle. First the theme develops quietly, companies grow, but attention is low. Then a breakthrough arrives — a major piece of news, a technology milestone, a political decision. Media start to write about it, social networks fill with enthusiastic posts. Retail investors pile in. Valuations shoot up. ETF providers react quickly — they launch new funds precisely at the peak of interest to capture demand. But the peak of interest is also the peak of valuation.
Concrete historical patterns
This pattern repeats reliably every decade: the biotech boom, the dot-com era, crypto ETFs, ARK Innovation, clean energy in 2021, metaverse funds. Each time the story was compelling — and each time the investor who bought at the hype peak waited years for a recovery, or never wrote off the loss.
- Clean energy (ICLN) peaked in February 2021, then fell over 60%.
- ARK Innovation attracted billions in 2021, then lost over 75% of its value.
- Metaverse ETFs were launched in summer 2021 — precisely at the peak of hype.
Why the brain fails
The psychological mechanism behind this pattern is well-documented — FOMO (fear of missing out) combined with the availability heuristic. The more we read about a theme, the more we perceive it as certain and attractive. Yet precisely this media presence signals that the market has already processed the information and prices reflect it. What the newspapers write today, smart money was buying two years ago. On how cognitive biases affect investment decisions, see the Hřivna blog.
How to protect yourself
The protection is simple on paper, hard in practice. Stick to your investment plan — define in advance the maximum share of thematic ETFs you will allow. Use DCA — regular purchases at a fixed amount automatically reduce the risk of entering at the peak, as explained in the cost-averaging article. Wait for the cool-down — if a theme dominates the media, wait until interest fades and then examine the fundamentals. Build the core portfolio on broad indexes, not fashionable themes.
FAQ
Why do thematic ETFs usually disappoint?
They are most often launched at the peak of media attention, when valuations are highest. Retail investors buy after the jump, not before it. Moreover, a good story does not guarantee good performance.
How do I recognise that I'm at the peak of hype?
When the theme makes front-page headlines, new ETFs are launching every month, and friends at dinner are talking about the investment. Those are reliable signals of overheating, not opportunity.
What should I do instead of buying a trendy ETF?
Build a core portfolio on a broad global index, and limit sector bets to a maximum of 5–10% of total allocation, purchased gradually through DCA — not in a lump sum at peak media attention.