Change the World with Thematic Portfolios: How Can You Invest in Major Trends?

11 August 2023

Investing has come a long way from the traditional approach of buying and holding stocks or bonds. Today, a growing number of investors are looking not only to generate financial returns but also to create a positive impact by investing in the latest trends and aligning their personal values and interests with their investment choices. This is where thematic portfolios come in, offering a unique and powerful way to participate in the global market trends that will shape the future.

Understanding Thematic Portfolios

Thematic portfolios refer to a collection of investments that are selected based on a specific theme or trend. They focus on capitalising on transformative forces and long-term trends that drive change in the economy, environment, and society. 

The S-curve of adoption is a widely used model that describes the diffusion and market penetration of innovative technologies, products, or services over time. This curve, which resembles the letter "S" in its shape, represents the various stages a new technology undergoes as it moves from introduction to eventual market saturation. Understanding the S-curve of adoption for sectors such as robotics and AI, e-mobility, and biotech can help investors assess the growth potential and timing of investments in these innovative themes, allowing them to capitalise on opportunities as the technologies evolve and transform industries globally.

Some key characteristics of thematic portfolios include:

  1. Forward-looking: Thematic portfolios aim to capitalise on future trends and growth potential rather than simply relying on past performance.
  2. Global scope: They typically involve investments from multiple regions and sectors, offering exposure to a broad range of opportunities.
  3. Customisable: Thematic portfolios can be tailored to suit an investor's unique values, interests, and financial goals.

The Role of Customisable Assets in Thematic Portfolios

Customisable assets allow investors to design thematic portfolios that reflect their personal values, interests, and financial objectives. By selecting individual stocks, ETFs, or mutual funds within specific themes, investors can build a portfolio that resonates with their beliefs and aspirations while also aiming for competitive returns.

Identifying Your Investment Themes

A critical step in building a thematic portfolio is identifying the themes that resonate with your values, interests, and long-term goals. Here are four popular investment themes to consider:

Environmental, Social, and Governance (ESG) Factors

ESG investing is a holistic approach that focuses on companies demonstrating strong environmental, social, and governance practices. By investing in ESG-compliant firms, investors can promote sustainable business practices while aiming for competitive returns. Some key areas within ESG investing include:

  • Environmental: Companies reducing carbon emissions, utilising renewable energy, managing waste responsibly, and implementing eco-friendly business practices. The environment and cleantech sectors focus on developing and implementing sustainable technologies and practices to address environmental challenges. By investing in these sectors, investors can support eco-friendly solutions while seeking growth opportunities in industries poised to benefit from the global shift towards sustainability.
  • Social: Businesses promoting diversity and inclusion, ensuring fair labour practices, maintaining positive community relations, and upholding human rights standards.
  • Governance: Organisations maintaining high standards of corporate governance, including transparent reporting, responsible executive compensation, and strong board oversight.

Technology and Innovation

The technology and innovation theme encompasses investments in companies driving technological advancements and disruptive innovations across various sectors. This theme allows investors to capitalise on the transformative potential of cutting-edge technologies and groundbreaking innovations. Key areas within this theme include:

  • Artificial intelligence (AI): Companies developing and utilising AI technologies for applications such as machine learning, natural language processing, and computer vision.
  • Blockchain: Investments in organisations leveraging blockchain technology for applications like secure data management, decentralised finance, and supply chain tracking.
  • Renewable energy: Businesses involved in the development, production, and distribution of clean and renewable energy sources, such as solar, wind, and hydropower.

StashAway's thematic portfolio, Technology Enablers, specifically targets this theme and provides exposure to the areas. Explore thematic Investing in AI, Blockchain and Robotics now. 

Healthcare and Well-being

The healthcare and well-being theme focuses on investments in companies involved in medical breakthroughs, healthcare services, and wellness products that contribute to improving people's health and well-being. By investing in this theme, investors can support companies working to enhance the quality of life for individuals around the world. Key areas within this theme include:

  • Biotechnology: Companies researching and developing innovative therapies and treatments for various diseases and medical conditions.
  • Telemedicine: Investments in organisations providing remote healthcare services, enabling patients to access medical care and consultations from the comfort of their homes.
  • Wellness products: Businesses offering products and services that promote physical, mental, and emotional well-being, such as fitness equipment, nutritional supplements, and mental health apps.

Emerging Markets and Demographics

This theme targets investments in countries with rapidly growing economies and populations, offering exposure to the expanding middle class, urbanisation, and infrastructure development. By investing in emerging markets and demographics, investors can tap into the growth potential of these economies while diversifying their portfolios. Key areas within this theme include:

  • Expanding middle class: Companies catering to the growing consumer demands of the emerging middle class, including sectors like retail, financial services, and consumer goods.
  • Urbanisation: Investments in organisations involved in the development and improvement of urban infrastructure, such as transportation, housing, and utilities.
  • Demographic shifts: Companies poised to benefit from changing demographics, such as an ageing population or an increasing focus on youth development and education.

How to Start Building a Thematic Portfolio

Once you've identified the themes that align with your values and interests, the next step is to build your thematic portfolio. Here's how:

  1. Identifying suitable investment vehicles: Depending on your level of expertise, time commitment, and risk tolerance, you can choose between individual stocks, ETFs, or mutual funds that focus on your selected themes. For instance, you may prefer investing in an ESG-focused ETF rather than researching and selecting individual ESG-compliant stocks.
  2. Diversification within themes: To minimise risk and optimise returns, it's crucial to diversify your investments within each theme. This means spreading your investments across different industries, sectors, and geographies related to the theme.
  3. Monitoring and Rebalancing Strategies: As with any investment portfolio, it's essential to regularly monitor the performance of your thematic portfolio and make adjustments as needed. This may involve rebalancing your investments to maintain your desired asset allocation or responding to shifts in market trends.

Explore StashAway's Thematic Portfolios

Discover the potential of thematic investing with StashAway and gain exposure to innovative sectors that aren't available in most balanced portfolios. Enhance your existing investments with strong equity diversification and maximise your thematic exposure while keeping your risk under control through our dynamic asset allocation based on your risk preference.

Invest confidently with portfolios that have been thoroughly researched and stress-tested by some of the world's top fund managers. Our investment team has meticulously selected the best thematic ETFs from hundreds of options, considering three criteria: efficient fund management, cost-efficiency, and liquidity.

With StashAway's Thematic Portfolios, you can enjoy competitive fees ranging between 0.2% and 0.8% for our annual management fee and an average expense ratio of 0.52% charged by ETF fund managers. Experience the convenience of no minimum investment amount and no subscription, switching, or rebalancing fees. Learn more about our pricing structure to take a step towards investing now.

Ready to change the world with your investments? Discover how StashAway's Thematic Portfolios can help you invest in the major trends shaping the future while aligning with your personal values and interests.

Find out more about our Thematic Portfolios →

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