Bringing you live news and features since 2006 

Bringing you news, views and analysis since 2013

Erratic thematics

While thematic investment funds have become hugely popular in recent years, investors need to treat them with caution, according to Nick Wood, head of fund research at Quilter Cheviot.

He writes that thematic funds are investments that allocate towards a specific theme or a number of themes, such as clean energy, the metaverse or electric vehicles. According to Global X, 2021 saw thematic ETFs record USD12.5 billion of net inflows, while in the US this number was a staggering USD44.3 billion. The most popular themes with investors included climate change, big data and disruptive technologies.

However, while thematic investing has clearly become more popular in recent years, Wood believes investors should tread very carefully as it is an easy area to get things wrong, particularly in an environment where growth stocks are struggling. 

“Many thematic funds will naturally be more growth biased and may have overlapping holdings,” Wood says. “With value having taken the lead from a style perspective, I suspect there are far fewer thematic funds performing well in that environment.”

Even with performance struggles, investors will have found it difficult, according to Wood, to catch the right long-term theme at the right time over the years.

Wood quotes recent data from JP Morgan that has shown that a basket of 1000 thematic funds has significantly underperformed the MSCI ACWI index over the last 16 years.

Latest News

Ossiam has announced the launch of a new ETF, the Ossiam Shiller Barclays CAPE Global Sector Value, listed on five..
VettaFi has announced that it is conducting a consultation with market participants on potential modifications to constituent criteria and weightings..
ETF data providers ETFGI report that assets invested in the global ETFs industry extended its lead over the global hedge..
New data from ETP provider GraniteShares, which offers a range of 3x short and 3x leveraged ETPs on popular UK,..

Related Articles

We are very pleased to open the voting for service providers (selected by nominations) and ETP issuers, selected by our data partners, Trackinsight, for the European ETF Express Awards, in...
Osprey Funds’ founder and CEO, Greg King, has written an open letter to Barry Silbert, majority owner of Digital Currency Group which owns Grayscale, suggesting that he uses his powers...
Comparing multifactor ETFs to the popular Marvel Avengers series may seem a bit of a stretch but recent analysis from Morningstar suggests the investment strategies have more in common with...
Canadian asset manager Mackenzie Investments, with CAD186.6 billion under management, has published its annual Mackenzie Investments Year-End ETF Report. ...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by