Is My Thematic ETF a Fad?

While surveying the ever-expanding menu of increasingly exotic themes, an investor might well ask: Will the thematic ETF I buy today still exist in 10 years?

Kenneth Lamont 8 November, 2018 | 7:18AM
Facebook Twitter LinkedIn

Thematic ETFs attempt to profit from long-term macro or structural trends such as environmental changes, demographic shifts, or technological advances. They include funds like ageing population ETFs, which hope to capitalise on long-term demographic shifts, but excludes those like Japanese Exporters ETFs, which are useful for making economic calls but lack a cohesive longer-term narrative that transcends the business cycle.

Unlike other investment approaches such as strategic-beta strategies, the best of which are tested across sprawling historical datasets, thematic investing is entirely focused on trends that have yet to fully play out.

This lack of track record means that a thematic investment proposition rests heavily on the research supporting the theme, making it particularly difficult to evaluate the robustness of the strategy. In many cases, the lack of appropriate benchmark or robust peer group also means that even ex-post performance is difficult to assess

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
iShares Automation&Robotics ETF USD Acc13.46 USD-0.37
L&G ROBO Global Rbtc and Atmtn ETF26.16 USD-0.38

About Author

Kenneth Lamont  is a passive funds research analyst for Morningstar Europe.