Islam on Nasdaq-100 Rebalancing & More
On this week’s episode of ETF Prime, host Nate Geraci was joined by Roxanna Islam, CFA, CAIA, head of sector & industry research at VettaFi. Together, Islam and Geraci examined the recent Nasdaq-100 index rebalance and how it connects to broader ETF trends. Afterward, Jon Maier, chief ETF strategist at J.P Morgan Asset Management, joined the podcast to discuss the rise of actively managed ETFs.
An Index Rebalanced
To start, Geraci first discussed the rebalancing of the Nasdaq-100. In particular, he noted how Palantir, MicroStrategy, and Axon have now joined the Nasdaq-100. Geraci noted that this change will affect hundreds of billions of dollars in ETFs .
Looking to highlight each company, Geraci first turned to MicroStrategy. He asked Islam if she had any thoughts on ETF or market tie-ins to MicroStrategy joining the Nasdaq-100.
Islam first explained some background on MicroStrategy. While it began as a tech company, many know it on the market as a proxy investment for bitcoin. In particular, she noted that MicroStrategy owns around 2% of all bitcoin in existence.
“It’s a little crazy to think that the Nasdaq-100 — which is something that’s pretty mainstream — it’ll basically be holding bitcoin,” added Islam. “I just think that’s really cool.”
MicroStrategy joining the Nasdaq-100 comes at a time, as Islam assessed, of rising investor interest in cryptocurrency. In this year alone, the iShares Bitcoin Trust ETF (IBIT) had some of the most dominant fund flows this year. The crypto ETF has seen about $37 billion in net flows.
Palantir in Focus
MicroStrategy was not the only interesting company to get added to the Nasdaq-100. Moving on to Palantir, Geraci asked Islam what she thought about the company joining the Nasdaq-100.
Noting that “Palantir is an AI play,” Islam reiterated that AI has been an incredibly popular theme for investors. While some ETFs can offer specific access to AI, Islam highlighted how many funds can offer an AI play without sticking to purely AI companies.
Along with crypto ETFs, Islam noted how some energy ETFs can be considered an AI play. This is due in part to “the energy demand [AI] is creating and is going to create,” added Islam.
Looking at specific examples, she highlighted uranium and nuclear ETFs as good means to play off AI momentum. One particular fund highlighted in this regard was the Global X Uranium ETF (URA).
Rise of Defense Spending
Last but certainly not least was Axon, which was added to the Nasdaq-100 with MicroStrategy and Palantir. Geraci asked Islam what ETF plays come to mind with this company joining the index.
Islam noted that Axon is a defense tech company, which bodes well, given the increased interest in defense sector investment this year. She also assessed that while some technology is involved in companies like Axon, these are industrial investments at their core.
ETFs tied to defense and defense tech have performed well this year, according to Islam. She highlighted the Global X Defense Tech ETF (SHLD), which earned the lion’s share of inflows towards its $713 million in AUM in this one year alone.
“A lot of interest this year in these sorts of ETFs, and I think part of that is that sort of geopolitical tension play,” noted Islam. “But it also comes from wanting something thematic, but wanting something that’s a little bit more concrete and realistic.”
Active Momentum
To close out this week’s podcast, Jon Maier, chief ETF strategist at J.P Morgan Asset Management, joined Geraci. Geraci highlighted the prominence of actively managed ETFs this year, given that active funds encompass about 70% of J.P. Morgan’s ETF assets.
Maier then highlighted the robust benefits that actively managed ETFs can offer. These funds can provide access to proven money managers, with the added perks of the ETF wrapper.
“I do think the active story will continue to play out and will continue to shine in 2025 and expand,” Maier noted. “More players will come into the marketplace.
Listen to the entire episode of ETF Prime, featuring Roxanna Islam and Jon Maier
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