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Thematic investments within the risk limits and structures of current portfolios

Making predictions for the future is one of the most common pastimes we do on a regular basis, especially when it comes to what we believe are likely to be popular trends. And now a days it is very often that some new technology being released which we call as being ‘the future’, like the robotics or the electric vehicles, or even the climate related solutions like solar energy etc. with the most recent global Pandemic , there will definitely be a surge of forecasting in online retail as well. After all the predictions being made are eventually turning out to be real and that is fascinating. It becomes more and more interesting when the inventors are willing to put their money where their mouths are and invest in the model of trends that are most likely to be holding a higher position with a great potential. In the case of thematic investing, a top-down investment approach in which investors seek to align macro factors with their investing strategies, participating in just such an exercise can generate substantial returns in the long run , that is an amorphous term. Thematic investing refers to a specific approach to investing that focuses on broad macroeconomic themes. From the old times investing has always been full of researches and its methodologies which have invariably divided opportunities along lines such as countries, regions, asset classes and individual stock characteristics. In the last 30 years, a new concept of thematic investing has gained traction, which has broad themes playing a very important role in the determination of the best investment opportunities, mainly over the long time Horizon. Allowing investors to capitalize on future trends by identifying macro-level themes today that are likely to flourish over the coming years and even decades is one such service. And the investors try to gain as much exposure as possible to their businesses and assets involving with those themes. Although recent evidence suggests that thematic investing is increasingly becoming a multi-asset strategy, ignoring geographical boundaries and focusing on finding companies and assets globally that can capitalize on shifting market conditions.

“It’s about uncovering great stories. Our thematic investing strategies use a top-down view of the global economy and markets. And we’re focused on the end goal. Instead of evaluating the specific sectors, securities or security types, we hone in on achieving specific outcomes.” Said JPMorgan Chase. Many of the technologies adopted the Diffusion of Innovation Theory of E.M. Rogers, an S shaped pattern adoption where the interest mounts slowly at first; it then accelerates as the technology becomes more widely accepted, continuing to grow at a healthy pace as mainstream adoption occurs; and, finally, it cools off as the few late-stage adopters finally come on board and the entire market is captured. “Global megatrends—or powerful seismic shifts—present opportunities to investors with a long-term view and an ability to identify the beneficiaries of these shifts before they become widely recognized,” RBC Global Asset Management explained in its whitepaper. Now with the new normal being given to us the much of the world should adjust and that only seems like it will make more sense that the investors make a concerned shift towards long term structural themes that shall not be restricted to its geography sectors or its assets classes. An interesting sound policy would be looking for the most resilient themes which will work the best for a longer period of time rather than being temporary.

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