Thematic Investing is future oriented investment i.e. the process of identifying future trends. Today’s environment has become ever so dynamic having a fast pace among whom winner will be those that anticipate trends and take advantage of new opportunities. Index services are dominating the investment market with wide range of opportunities available for thematic investment.
Index Services enables a person to remain up to date with latest investment portfolio being able to accumulate information on thematic investing.
Thematic capitalizes on long term trends that are spread across economic and geographic boundaries. It recognizes the fact the world is changing rapidly and thus underlying drivers are long term value creation.
Thematic Investing takes a top-down approach identifying powerful macro level trends through managed funds or basket of related stocks. It seeks to identify long term secure trends that are likely to shape the world we live in and will be the driving forces behind the financial markets in future. Obviously the biggest challenge lies in identifying the key trends of the future and more importantly whether these trends will turn into profitable investment opportunities in future.
The primary focus of thematic investing is to invest in ideas and sectors which you believe can evolve independently of the economic cycle. It is more of your conviction or belief in certain future trend and technology that you believe are going to be future leaders. It is alternative to the mainstream method of investment through mutual funds.
Thematic Investing approach
1) Choose a particular theme or trend: Choose a particular theme or trend based on your conviction and belief that you believe are future-oriented that you want to invest in. Studying various development in technology, politics, resources and studying various trends that could impact future generations can be used to select a theme that one believes could turn profitable in future.
2) Identifying Similar Companies: Identifying list of companies or Exchange Traded Funds with direct or indirect exposure to your chosen theme or idea via industry, business model, product line, services, demographics, holding, values or customer base.
3) Narrow down choices: Amongst the above identified stocks that represent your theme based on your prediction narrow down the list that most closely relate to the theme.
Benefits of Thematic Investing
1) Based on your values/ Beliefs: Instead of stepping onto unknown it is always better to invest your hard earned money into the ideas and trends that you value and find exciting & future oriented also serves as an opportunity to align your values with your investment.
2) Vast Choice: There are huge choices available to create a portfolio for yourself, choosing funds that are identical to the theme that you have chosen. Varieties of mutual funds are available to invest.
3) Flexibility & Transparency: Customizing your own portfolio is a great opportunity in itself. It lets you identify and relate to the stocks that you relate to individually. It gives flexibility to choose from wide range of available stocks and lets you transparently see through the portfolio that you have chosen.
4) Easy to access: Thematic investing has gained lot of popularity these days and is accessible to investors of all brackets to choose in the ideas that you believe has the potential to boom in coming times ahead.
By gaining the implicit insights of growing trends Thematic Investments are chosen based on companies that will benefit from long term structural trends. Index services also help in assisting the task of identifying profitable portfolios.