Thematic investing does have a lot in common with other approaches, particularly sector investing. The difference lies mainly in what the investor chooses to focus on. For example, thematic investing is often conflated with sector investing, but the two strategies actually approach the markets at different levels.
How Does Sector Investing Compare To Thematic Investing?
Sector-based investing focuses on specific parts of the economy, such as commodities or technology, for example, and channels investment funds into those sectors. In contrast, a thematic investor will identify a particular economic, social, political or technological trend and then look for sectors, assets, funds and companies who are closely linked to that trend.
For example, whereas a sector investor may choose to focus on the tech sector, a thematic investor might determine that the growth of artificial intelligence is a major theme for the next decade. There is a subtle but significant distinction in this shift in emphasis. The sector investor may channel funds into Silicon Valley, while the thematic investor may take a longer and broader view, focusing some investment on the tech sector itself but also taking into account other sectors and how they will be affected by the rise in AI.
The difference between sector and thematic investing is often a matter of focus or emphasis. Both approaches might lead an investor to add some of the same assets to their portfolios, but they reach these decisions via a different route. Whereas sector investors may investigate various industries, examining their past and present performance to see if they appear to be safe investments, thematic investors will begin by seeking out trends and themes that seem likely to generate future growth across a wide variety of markets and industries.
Why Thematic Investing With NPW?
NPW’s wealth managers have a great deal of individual and collective experience with all investment approaches. Using our knowledge of global trends, and informed by the latest economic and political indicators, we are able to identify the most promising trends and themes and make investments on your behalf to ensure that your money will grow in the near and distant future.
Nour Private Wealth (NPW) is a Canadian company with a team of wealth advisors servicing clients across seven provinces. For more information on thematic investing and other forms of wealth creation and preservation, contact us today and speak to one of our wealth advisors.