What Are Thematic Funds And For Whom They Are Suitable?
May 24, 2021
Thematic funds are funds that generally emphasize a certain investment theme in their strategies. The content they invest in is much more comprehensive and broad.
For example, an infrastructure-themed investment fund can invest in many different sectors such as cement, construction, and energy. They can have higher volatility compared to equity funds. In this article, we examine what is a Thematic Fund and which investors are it best suited for.
What is Thematic Fund?
It offers companies in certain segments of the economy to focus on segments such as sector investments, healthcare, energy or information technology.
The interest in thematic investment funds has been increasing in recent years. There is a wide range of thematic funds available, ranging from artificial intelligence to energy and health.
Thematic investment is an approach that focuses on projected long-term trends rather than specific companies or industries, giving investors access to structural, one-off shifts that can chat an entire industry.
Before investing in any mutual fund or exchange traded fund, you should consider investment objectives, risks, fees and expenses.
Given the nature of the respective securities, market volatility is a common factor in all thematic funds and the investment theme should be thoroughly researched.
Individual investors are increasingly willing to invest in funds, and against this background, we can expect a further increase in the number of ETFs (especially thematic ones).
In recent quarters, popular “topics” have been technological progress, social change, climate issues, growing prosperity around the world and the impact of the COVID-19 pandemic.
The Covid-19 outbreak definitely disrupted the social structure of human life as well as the economy. There will be a paradigm shift in the way companies do their jobs and the behaviour of consumers.
The most interesting thematic fund is technology funds. Funds focusing on structural technological changes. Categories such as robot technologies, automation and digital infrastructure investments are included in these funds.
It can be beneficial to set long-term goals to invest in thematic funds. The risks of thematic funds should be thoroughly investigated and a plan should be established accordingly, for this, you can take help of top 10 investment services companies.
Which fund is right for me?
Due to the variety of funds, each investor can choose the investment direction that suits him best. Funds can be selected according to the preferred investment strategy, region or sector of activity, from energy to real estate or biotechnology.
The chosen strategy determines the proportion of stocks or bonds in the fund’s portfolio. It should always be remembered that the greater the number of different shares in the fund, the greater the range of fluctuations in the value of the fund shares and, therefore, the higher the risk.
A fund with a higher share of bonds is likely to be more stable, but its expected yield is also lower. The acceptable level of risk should be assessed by each novice investor based on their own investment goals, depending on whether the goal is higher returns or more stable growth in savings.
It should be borne in mind that each investment is associated with one or another level of risk, because no investment is completely risk-free, and this is why, you should contact investment services provider.