Each new strategy builds the way to successful investment by maximizing the returns. There are different approaches which aim at maximizing the total return. One such approach is Thematic Investing. When you are using this approach in investment, what you are doing is ideally is taking advantage of the future trends. Being a top-down approach, it helps the investors to gain exposure to the macroeconomic themes and trends through managed funds or baskets of related stocks.
This type of investment can replicate some Equity Index or any Custom Index. Usually, it can be seen to replicate some form of Exchange Traded Funds. It recognizes that the world is changing rapidly and incorporates a deep understanding of the underlying drivers of long-term value creation and risk. Typically, investors might consider three different options for thematic investing.
This approach to investing offers low correlation to the rectums of traditional growth strategies and a negative correlation with the relative returns on traditional value strategies which can lead to diversification of portfolio for the investor. Diversification of portfolio can help the investor to maximize returns with minimum risk.The frequency of the relationship between two asset classes is determined by correlation. A correlation of 1.0 shows that the two appear to shift in absolute lockstep. The relationship between them is absolutely random if the correlation is zero. They appear to travel in opposite directions when they have a negative connection.
The alpha measures the performance of your fund against a specific benchmark index. Benchmarks usually capture the past successes. While thematic investing seeks to capture the future growth which helps the investors to earn market premium. For most funds and other portfolios, alpha stocks are usually expressed in percentage form, although some securities quote the value in numeric terms.
Since this investment approach focuses constantly on the secular changes and disruptive innovation, this method of investing can offer a portfolio hedge in a rapidly changing world and can complement the traditional index-based strategies. Aside from large indexes, there are sector indexes for specific sectors, country indexes for stocks in specific countries, style indexes for fast-growing companies or value-priced stocks, and other indexes that restrict their investments based on their own filtering systems.
Put money into ideas and trends that are already familiar and exciting to you. Having in-depth knowledge or first-hand experience in a particular trend can drive your ability to make smart investment choices. Adding sector funds as satellites to diversified core holdings is a successful portfolio strategy. You’re not putting all of your eggs in one basket this way; instead, you’re putting a few more eggs in a few separate baskets.
Listed Stocks on major exchanges and 5000+ mutual funds is available for our investors. If there’s a theme or idea you’re interested in investing in, there’s likely already a thematic portfolio created for it. Our dedicated team study the Economic and non-Economic factors that are reshaping the investment landscape. We have identified number of parametersto form the basis of each of the thematic equity strategies.Our thematic strategies are designed to capitalize on this pattern. There are unique portfolio-building guidelines for and of the thematic techniques we handle.
If you are passionate about helping society, you could choose to invest in Cause driven portfolios that focus on social responsibility, ending poverty, improving education or fighting cancer. The investment process aim is to achieve positive returns over a short/long term, regardless of market conditions. A strategy, which uses effective, liquid interest and currency instruments, is the core component, in addition to bond selection, which includes ESG requirements. A success factor is the mixture of rigorous risk control.
Traditionally, thematic investing has been limited to more sophisticated institutional investors due to the research required to pinpoint companies with high exposure to a theme and the need to access a variety of international markets for themes that are global in nature. Thematic ETFs track indexes that take care of the security selection part of the process and can provide access to a broad set of companies around the world with exposure to a particular theme.
Breaking out from the grid-like method of asset allocation, its approach to geographies and sectors have low correlations to other portfolio strategies. This can be particularly useful for investment managers seeking to diversify sources of growth.
When you invest in a thematic portfolio, you are putting money into ideas and trends that are already familiar and exciting to you. Having in-depth knowledge or first hand experience in a particular trend can drive your ability to make smart investment choices. Meanwhile, doing research on that particular theme would come naturally and will strengthen your position and improve your ability to customise your own portfolio.
Thematic investing means looking at the bigger picture, where you’re investing based on big global economic trends rather than short-term economic cycles. What this means is that companies which are supporting such important, long-term changes will usually suffer the least from regional economic downturns, as their results outweigh market trends.
Any advice provided by Laverne is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.