How to Master Thematic Investing

To successfully generate strong returns for investors through thematic investing, it is important to be able to identify themes at the beginning of their evolution

J.P. Morgan Asset Management 20 November, 2013 | 5:04PM
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Five years ago, luxury and aspiration was a key driver of returns, but more recently the emphasis has shifted to other emerging themes. In the last three years we have focused on the themes of health and wellness and technology mobility.

Health and Wellness

In 2010, we began to build up exposure to healthcare stocks, having identified the strong structural tailwinds for the sector. There is significant demand for healthcare across emerging markets, which are forecast to contribute around 70% of pharmaceuticals growth over the next five years. The Chinese government is investing $125 billion into developing their healthcare system, recognising that it will also contribute to greater productivity by the workforce.  Healthcare spending in emerging markets is increasing, however, is still small by developed world standards so this thematic remains of interest to the fund manager.  

Much of the intellectual property and trust for healthcare products still resides with developed market companies, which creates significant value as these companies distribute more globally.  Of the $180 billion spent on pharmaceuticals in 2012, 94% were branded. Sanofi, for example, is a leading provider of diabetes treatment in China, where three quarters of Chinese patients remain untreated.

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About Author

J.P. Morgan Asset Management  is the investment arm of JPMorgan Chase & Co. and it is one of the largest active asset managers in the world.