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Monday, September 05, 2022
Leverage future trends with Thematic Investments
By Century Financial in Blog
Those who saw the potential of the internet before its boom generated massive returns from their investments in this space. Thematic investments involve investing in potentially ground-breaking trends of the future. When these trends materialise as growth booms, the returns from these thematic investments surpass the average returns from most financial instruments like index trading.
Identifying and investing in disruptive innovation of the future could carry great rewards. However, strategically assessing and sorting the trends with the greatest potential of succeeding in the future is crucial to ensure good returns.
What are thematic investments?
Essentially functioning as long-term investments, thematic investments refer to making strategic investments that follow a theme. This theme could be indicative of a potential disruptor of the market in the future. Thematic investments are not limited to single stock but could be a collection of stocks contributing to a foreseeable growth opportunity.
For example, investing in the stocks of various companies researching and manufacturing self-driven cars, companies working on technology that could support self-driven vehicles and companies supplying parts needed by self-driven vehicles could form a good thematic investment fund for those who believe that self-driven cars are going to bring about a structural shift in the way the automobile industry functions.
Why do investors choose thematic investments?
With thematic investments, they are long term plays and doesn’t require frequent montoring as we do with trading, say currency trading. We can invest in the future by investing in the industries we believe in, like renewable energy or electric vehicles. By making such investments, we are contributing the future technology in a small way, supporting innovation while making smart, long-term investments. Most thematic investments today could also be ethical because our investments could steer the direction in which we wish to see the future.
Thematic investments tend to outperform the results from indices trading and other forms of investments when the trend we invested in has successfully created an impact. Though they carry a significant amount of risk, a well-researched investment with complete due diligence could give equally high returns from a long-term perspective.
That's where choosing the right consulting partners can help you understand investments in a more structured manner and equip you with the right resources to become a better investor.
The impact of thematic investments so far
Trading platforms or financial consultancies that indulge in thematic investment options conduct thorough research before offering them as a viable investment product. Historically, thematic ETFs’ hold on the industry assets has been only 2% while generating 6% of its total revenue. Morningstar reported a 186% increase in the amount invested in thematic funds just between 2019 and 2021. The Environmental, Social and Governance sector has been projected to cross $50 trillion by 2025, as per the Bloomberg Intelligence reports.
We can make thematic investments in many ways. We can invest in funds created by fund managers who cherry-pick stocks that can fetch high returns. We can also invest in passive funds like thematic fund ETFs or choose a wide range of stocks that can form a portfolio following a singular theme with the potential of growing significantly in the future.
If you leverage future trends and indulge in thematic investing, ensure that you follow the market movements and stay up-to-date with the latest information that can influence your thematic investment portfolio. Ensure that you choose promising stocks that contribute to a major trend that can reshape an industry in the near future and has maybe even started to show results in that direction.
Disclaimer: Century Financial Consultancy LLC (“CFC”) is Limited Liability Company incorporated under the Laws of UAE and is duly licensed and regulated by the Emirates Securities and Commodities Authority of UAE (SCA). This document is a marketing material and is for informational purposes only and must not be construed to be an advice to invest or otherwise in any investment or financial product. CFC does not guarantee as to adequacy, accuracy, completeness or reliability of any information or data contained herein and under no circumstances whatsoever none of such information or data be construed as an advice or trading strategy or recommendation to deal (Buy/Sell) in any investment or financial product. CFC is not responsible or liable for any result, gain or loss, based on this information, in whole or in part. Please carefully read full disclosure mentioned on the website.