The Dark Side of Thematic Funds

Funds with compelling stories don't always make sound investments

Amy Arnott 19 May, 2021 | 10:47AM
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Thematic funds--which focus on emerging trends such as clean energy, robotics, legalised marijuana, or working from home--have been all the rage lately. Roughly 150 such funds have hit the market over the past three years. They’ve been met with an enthusiastic reception; in fact, some of the industry’s fastest-growing offerings are sector funds defined around a specific theme, including the popular Emerge ARK Global Disruptive Innovt ETF (EARK) and its theme-based siblings focusing on fintech, genomics, autonomous technology and robotics, and next-generation Internet stocks.

These funds have an understandable appeal. It’s easy to get excited about evolving technologies such as genomics, a new field of biotechnology that involves using genetic maps and DNA sequencing to improve medical outcomes. These technologies have the potential to revolutionise the field of medicine and improve millions of lives.

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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.

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Amy Arnott  Amy Arnott