Investors consistently face the question of whether history will repeat itself, or if this time will be different. Does one position their portfolio based on what they’ve learned from the past or make adjustments based on their expectations for a different future?
The recent proliferation of smart beta ETFs and related factor-based research has placed a substantial amount of attention on analyzing the past. The success of these strategies ultimately depends on information from historical stock patterns providing valuable clues to future stock movements. But equally as important should be preparing for a future that may look completely different to anything we are accustomed to.
This is the where thematic investing comes in. It is a forward-looking investment approach that seeks to embrace the changes we anticipate happening in the world. When conducted properly, we believe thematic investing can help position a portfolio for an uncharted era of new technologies disrupting existing paradigms, demographics reshaping the needs of the world’s population, and shifting consumer behaviors forcing changes to existing business models.
In this whitepaper, we seek to help investors understand the intricacies of thematic investing and how to best approach the space, by exploring the following topics:
- Why Your Portfolio Should Go Thematic
- The Differences Between Cyclical and Structural Themes
- What Does Thematic Growth Look Like?
- Meet the Sector Disruptors
- The Risk-based Argument for Thematic Investing
- How to Value Themes
- What Happens When Themes Converge?