Thematic Investing: What You Should Know About It

Thematic investing is a long-term investment strategy that aims at opportunities in transformational trends. Thematic investors focus on predicted long-term trends rather than specific companies or sectors. In addition, it enables investors to access structural, one-off shifts that can transform an entire industry and sector.

What is Thematic Investing

Thematic investing is the method of investment where investors aim to capitalize on economic trends. That is successful. Cybersecurity, blockchain, or clean energy are popular trends of investing thematically. Investing brings together various companies from tech, retail, gaming, hospitality, and more.

How Thematic Investing Works

The main criteria for investing thematically while choosing stocks, ETFs, mutual funds, and other investments:

  • Long-term trends
  • Ideas
  • Beliefs
  • Values
  • Disruption 

Thematically investing helps you channel your money where you believe the world is heading. For example, you invest in women-run companies to support the rights of women in society; or companies that prioritize environmental sustainability because you care about ecology.

When you invest in mutual funds or exchange-traded funds (ETFs), you can benefit from expert portfolio managers and research teams who strive to build high-performing products. You can invest in thematic mutual funds or exchange-traded funds (ETFs), which provide you with professional investment analysis and management benefits. Investing in a thematic fund allows you to diversify your risk by investing in a single theme.

Thematic Investing vs. Sector Investing

People frequently mistake thematic investment with sector investing, but there are several important distinctions between them. Investing in specific sectors of the economy is a sector investing—for instance, energy, healthcare, and information technology. However, thematically investing uses broader technical advancements to boost output across numerous industries.


However, there are some drawbacks to using this strategy. According to Morningstar, thematic funds frequently invest in smaller, less liquid stocks in search of companies with the highest exposure to developing topics and the most remarkable development potential. They may pile into the same companies’ shares.

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