[1] Thematic investing aims to seize opportunities arising from megatrends likely to shape the global economy in the decades ahead.
The manager will pick things they think are important, so it might be the emergence of emerging markets, something changing about technology, or an aspect of the environment, such as water shortages.”[3] According to Charles Richardson (Veritas), the benefits include “formulation of strategic context, getting behind future tailwinds, narrowing the universe, and focusing further research while avoiding spot forecasting or market timing.”[3] Jan Luthman (Liontrust) said: “Today’s macro themes are both unprecedented and powerful.
[2] In order to build a common definition, the company emphasized that thematic investing is necessarily based on megatrends, and that “a theme must imperatively be structural, international, and multi-sectoral”.
[2] This approach tends to “make financial investments more tangible for investors, whether they are individuals or institutional, as they can more easily grasp the meaning behind their asset allocation”.
Themes are based on a megatrend such as population ageing, the digital revolution, or the rise of the middle class in emerging markets.
Galilee Asset Management cautioned in its 2022 white paper against funds that simply leverage popular marketing themes to attract investors without implementing a rigorous methodology.