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23 May 2022 00h00
Source: Banco Carregosa

What are thematic investments?

What are thematic investments?

 

 

Thematic investing is an approach that focuses on long-term macrotrends, rather than specific companies or sectors. In this way, it allows investors to access structural and one-off changes that may affect an entire industry.  Driven by a growing demand, a new investment strategy has gained increasing prominence.

 

Thematic investments allow investors to benefit from growth opportunities and align their financial portfolio with their individual beliefs and values, as well as their personal world view. Find out about thematic investments and their benefits.
 
 

What are thematic investments?

  
Thematic investing is an approach that focuses on long-term macrotrends, rather than specific companies or sectors. In this way, it allows investors to access structural and one-off changes that may affect an entire industry. 
 
There are thematic funds based on disruptive trends, such as cloud computing, and strategies based on core values, such as environmental sustainability. The key to thematic investments is to find funds that align with your personal principles, risk profile and profitability goals.  
 
Historically, investment approaches were divided into countries or regions (US, emerging markets, etc.), asset classes (equities, bonds, mixed) and individual characteristics of the securities involved (higher or lower growth potential and associated risk). 
 
But over the past 30 years, the concept of thematic investing has gained traction, with many investors seeking exposure to forward-looking trends, such as sustainability or healthcare, and to access the best investment opportunities and diversify exposure within those spheres. 
 
 

The advantages of thematic investments  


Thematic investments allow investors to capitalise on future trends by identifying the macro themes that will gain traction in the coming years and decades. In this way, thematic investors gain exposure to the businesses and assets involved in these themes.
 
In a nutshell, the advantages of thematic investments are:
 
Innovation. Thematic investments allow us to invest in the future today, and support the companies and institutions that are shaping our economy and society. 
 
Global exposure. Investing in thematic funds is a way to gain exposure to companies poised for long-term growth in different parts of the world.
 
Specialisation. Unlike funds that track a generalist index or broad region, thematic investing offers exposure focused on sectors, ideas, events and government policies. 
 
Profitability. The growing appetite for thematic investments stems from the need to identify future drivers of profitability (such as technological advances), which gives them the potential to outperform traditional broad indices that reflect the movement of the entire market. 
 
This is why thematic investments are especially suited to investors who know what they are looking for, both in terms of personal values and ideas for the future of a given theme, and who have a good knowledge and understanding of these businesses. 
 
 

What types of thematic investments are there?  


Thematic funds tend to cover various sectors and identify companies in those areas that are relevant to a main theme. A healthcare thematic fund, for example, invests in pharmaceutical companies, hospital companies and insurance companies. A technology fund, on the other hand, might invest in institutions that are developing themes such as artificial intelligence (AI) and machine learning (ML).
 
Investment opportunities linked to the concept of sustainability, such as clean energy, are naturally attracting the attention of many investors concerned about the environment. An ESG (Environmental, Social and Corporate Governance) fund selects companies with high environmental standards.
 
Beyond traditional investment fund analysis, our ESG engagement also focuses on non-financial aspects of a company. 
 
The key to successful investing lies in identifying the potential for structural change and investing early on in the transformations expected (such as the emergence of the Internet in the 1990s). This is particularly important for long-term investors who are looking to ensure their portfolios are positioned for growth opportunities and in line with their world view. Contact our team of experts to find out how we can help you invest in thematic investment funds.
 
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