Investing in themes means focusing on structural trends that are expected to significantly affect economies and redefine business. We believe megatrends and associated themes such as environmental sustainability, the energy transition, disruptive technology, and consumer and healthcare innovation can play a big role in the returns and risks of a wide range of investments.
Think of megatrends including globalisation, increased regulation and deregulation, the rapid pace of digitalisation and technological innovation. A number of factors are at play, including demographic shifts, social or behavioural changes, a greater urgency to preserve the environment, resource scarcity, economic imbalances and political changes.
Thematic investing need not be limited to a particular industry or sector, to well-established firms or just start-ups, or to companies of a certain size. Themes such as consumer innovation transcend the traditional sectors: they touch on healthcare, telecommunications and retailing, to name but a few. Themes can involve companies in all stages of their growth cycle.
Contrary to some views, investing in themes is not limited to publicly listed equities or corporate bonds. Private equity or debt can also be a way to gain exposure to a theme.
Another myth is that thematic investing is about growth companies. We believe that any advantage that a group of companies has over industry peers or any factor that disrupts entire industries can be useful when identifying a theme.
Finally, it is worth pointing out that, in our view, themes are not restricted to countries or regions. We take a global perspective when investing in a theme.
Watch our Allocating to thematic investments video to find out about how this approach can bring a new dimension to portfolios that is transcending asset classes, sectors, regions and styles