What is a thematic fund?
Thematic investing is based on predicting long-term trends in which it is more rewarding to invest, rather than specific companies or sectors. A Thematic fund is an equity mutual fund that invests in a particular theme, focusing on sectors and industries linked to that specific theme.
Thematic funds are much broader than sectoral funds, as they cluster different companies and sectors according to themes. For instance, an infrastructure theme fund will invest in cement, power and steel, to name a few.
This is a top down investment approach, where investors first look at the global scenario and then pick those particular sectors that have the potential to outperform, investigating the best individual stocks.
Among the top themes worth following in 2022, we can name Green energy and clean technology, Smart factories and automation, E-commerce, Genomics and biotech.
What is an Exchange-Traded Fund?
An exchange-traded fund (ETF) is a type of pooled investment security that trades on an exchange just like a stock does.
Usually , ETFs will track a specific index or sector, or other type of asset: they can contain all types of investments, including stocks, commodities, or bonds; some offer national holdings while others are international.
ETF share prices fluctuate all day as the ETF is bought and sold; and it includes fewer broker commissions than buying the stocks individually.
ETFs are a diversity-based solution where you can easily get a mix of stocks without spending time on individual stock analysis, all at once.
This way your investments are spread out on the market, and you get a chance to exploit the overall performance.
Thematic ETFs are the ideal choice for thematic investing. In a single transaction, investors catch the investment opportunity of one or more themes emerging from trends and megatrends.
You can start investing in ETFs on your own, opening a brokerage account or relying on robo advisors, which don’t let you pick your own investments, but they will use ETfs to create your portfolio.
All EFTs have expenses and administrative fees charged by the fund but it’s very important to compare them. Index ETFs usually have lower ratios than actively-managed ETFs (they shouldn’t be higher than 1%, otherwise the high expense ratio is likely to eat into your profits.
What are the top ETFs at the moment?
According to Nasdaq these are the top 5 performing thematic ETFs in America in Q1 2022:
- Ninepoint Energy Fund (NNRG): +40%
- Direxion Daily Dow Jones Internet Bear 3X Shares ETF (WEBS) +34%
- SPDR S&P North American Natural Resources ETF: +34%
- iShares Indice Carbono Eficiente (ICO2) Brasil ETF (ECOO11): +32%
- iShares North American Natural Resources ETF (IGE): +31%
We have collected a list of Thematic ETF’s providers to keep an eye on:
How Artificial Intelligence can help you invest?
Thanks to Artificial Intelligence applied to alternative data, everyday you can collect data from social networks, blogs, forums and news, in order to make more data-driven decisions about your investing and boost your portfolio.
FinScience selects and analyzes the most promising stocks – evaluating long-term trends – for a forward looking approach to investing.