What Is a Thematic Investment Strategy?

Thematic investing is a strategy that involves aligning the selection of assets with one or more prevailing themes. The themes could relate to specific sectors, but more often, they involve long-term, wide-ranging political and economic trends. An investor or wealth manager will start by identifying a macro-level trend. The aim is to understand these trends and try to predict how they will move in future. 

They then use this knowledge to inform their investment decisions. This strategy entails the careful analysis of the trends and then selecting investment targets – companies and other assets – that are likely to show significant growth as a result of their association with those trends. Global thematic investment is sector independent, cutting across national boundaries and traditional sectors.

Investing For Your Future By Investing In The Future

Traditional investing approaches tend to be oriented towards the past. Investors look at the past performance of certain sectors, equities or commodities, and make their investment decisions on the basis of projections from those past patterns. With thematic investing, the approach and philosophy behind investing decisions are quite the opposite. Instead of studying the past movements of the markets, investors look ahead and look for nascent trends that are likely to generate considerable growth in the long-term future. This forward-looking strategy can really help investors to put their money into investments that can grow and protect their wealth over the long term.

Connect Megatrends To Investment Themes

One of the main tasks in developing a thematic investment strategy is to identify “mega-trends,” political, economic, technological or social trends that are likely to develop over the coming years in such a way as to generate considerable growth in related sectors. For example, in 2020/2021, the most important megatrends have been digital transformation, healthcare innovation, and sustainable transport and industry. These megatrends can then be linked to investment themes, which will then help investors and wealth managers to identify specific targets – companies, assets, etc. which would be likely to show significant future growth as a result of their exposure to these trends. 

Nour Private Wealth (NPW)  is a Canadian company with a team of wealth advisors servicing clients across seven provinces. For more information on thematic investment and other forms of wealth creation and preservation, contact us today and speak to one of our wealth advisors.

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