Do you have plans to immerse yourself in the world of investing? In that case, you may need more than your current knowledge about stock investing. To succeed in this financial sector, you need to know what investment funds will work best.

Here is where thematic funds come in. Unlike other investments, thematic investments offer investment opportunities in world-transforming trends.

This type of investment focuses on predicted long-term trends. Because of that approach, we get to capitalize on changes across industries.

Are you curious about thematic funds? This quick guide will help risk-takers understand what thematic investment is.

Thematic Funds Explained

Thematic Funds Explained

In stock investing, people would often go for individual stock selection. It’s an investment option that beginners often choose. While getting a share in one or two companies works, they’re not the best option out there.

Thematic funds invest in well-defined stocks and ETFs. Keep in mind that these funds differ from sector funds. People often confuse sector investing with thematic investing. While they look the same, thematic funds are more diverse.

Sector investing targets companies that fall into specific economic segments. Meanwhile, thematic investing focuses on many sectors to align them with our objectives.

It’s also an investing approach focusing on long-term trends predicted to become successful. It means that instead of specific sectors, investors look at trending themes.

Thematic funds use a long-term investing strategy. With that, investors get exposed to shifts that affect a whole industry.

In thematic investing, investors center their investments on some megatrends. These trends are all affected by technological breakthroughs like the following.

  • Rapid urbanization
  • Shifting economic powers
  • Demographic and social changes

Aside from that, man and the Earth often conflict with each other. This struggle introduces climate change that investors use in thematic investments.

How Thematic Investing Works

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Thematic investing checks certain factors when choosing mutual funds, stocks, and ETFs. Here are some of the factors thematic investors consider.

  • Long-term trends
  • Ideas
  • Beliefs
  • Values
  • Disruption

Often, thematic investments focus on megatrends and sustainable investing. But some investors concentrate their investments on their beliefs and ideals.

For example, value-based thematic investments can focus investments on women-run companies. Meanwhile, green movement investors would go for companies focusing on environmental sustainability.

There are two goals of thematic investment. One of them is to find quality investments that blend with our investment plan. The second is to have quality investment plans that still reflect our beliefs.

Benefits of Thematic Funds and Investment

Benefits of Thematic Funds and Investment

Investing in high-growth potential sectors can result in higher fund increases. This increase becomes more prominent when high product demand. Thematic funds work like that.

The main benefit of thematic investing is its high exposure to trends. When the growth trend of your chosen theme has a consistent demand prediction, the more you will earn.

This type of investment is the best in complementing our existing investment plans.

Understanding the Workings of Thematic Funds

Investing is always a tricky and risky way to gain profits. However, there are still ways to limit that and increase our funds.

Thematic funds allow investors to focus on themes and trends that give more returns. Aside from that, it lets us put money on things that matter to us.

Did this article help you? Check our other blog posts for more finance-related content. We also have other topics that you can enjoy.

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