Falling Short in the Digital Age: Evaluating the Performance of Data Center ETFs

This study evaluates the performance of U.S. data center Exchange-Traded Funds (ETFs) relative to major equity and technology benchmarks, using monthly returns from January 2000 through December 2024, with particular emphasis on the COVID-19 period and the subsequent post-vaccine era. Data center ETFs have not provided better risk-adjusted returns even though they are often advertised as access points to the digital economy. Digital infrastructure demand increased through the pandemic but did not improve the performance of these funds which stayed weak across both traditional and conditional multi-factor asset pricing models. These ETFs struggle with asset selection and market timing proficiency, which leads to relatively poor performance results during volatile market conditions. The downside risks linked to these funds tend to match or exceed the downside risks of broader indices like the S&P 1500 Information Technology Index. Although these investments are based on strong thematic narratives, they do not achieve returns that align with investor expectations.

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Publication Details

Journal
Journal of risk and financial management
Published
2025-08-11
DOI
https://doi.org/10.3390/jrfm18080449
Primary Topic
Financial Markets and Investment Strategies
Type
article
Field-Weighted Citation Impact
0.00
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article

Falling Short in the Digital Age: Evaluating the Performance of Data Center ETFs

D.K. Malhotra, Ivar Kirkhorn, Frank Ragone
Journal of risk and financial management
Financial Markets and Investment Strategies
article

Falling Short in the Digital Age: Evaluating the Performance of Data Center ETFs

D.K. Malhotra, Ivar Kirkhorn, Frank Ragone
article en

Abstract

This study evaluates the performance of U.S. data center Exchange-Traded Funds (ETFs) relative to major equity and technology benchmarks, using monthly returns from January 2000 through December 2024, with particular emphasis on the COVID-19 period and the subsequent post-vaccine era. Data center ETFs have not provided better risk-adjusted returns even though they are often advertised as access points to the digital economy. Digital infrastructure demand increased through the pandemic but did not improve the performance of these funds which stayed weak across both traditional and conditional multi-factor asset pricing models. These ETFs struggle with asset selection and market timing proficiency, which leads to relatively poor performance results during volatile market conditions. The downside risks linked to these funds tend to match or exceed the downside risks of broader indices like the S&P 1500 Information Technology Index. Although these investments are based on strong thematic narratives, they do not achieve returns that align with investor expectations.

Journal of risk and financial managementVol. 18(8)
Thomas Jefferson University (US), University of Illinois Chicago (US), University of Chicago (US)
Openalex Percentile: Top 73%
Financial Markets and Investment Strategies
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