Investing in a thematic fund is an easy way to gain exposure to a trend you believe in, but how are these funds really performing? As part of our special report week on thematic investing, we reveal are the best and worst returning funds of the past year.
There are 444 open-ended and exchange-traded funds that are accessible to UK investors. For this article, we have looked at the one-year performance of the 295 open-ended thematic funds as well as the 149 thematic ETFs that are available for sale to UK investors. For open-ended funds, returns vary by over 110% from 71% to -42%. Meanwhile, for thematic ETFs, the range of returns vary by 200%, from growing by 141% to losing 59%.
We have previously asked whether unique ETFs like thematics are investable, and whether they should play a role in your portfolio. Morningstar’s senior analyst Kenneth Lamont then pointed out that if you are looking to invest in themed funds, even more diligence and research is needed than normal.
He said: “Remain sceptical. Investors should look beyond a compelling narrative when assessing these funds. Understand how the fund tracks its chosen theme, is it worth the extra fee? Crucially, understand that these funds can provide outsized returns, but this comes with significant risk and that they should only form a small portion of a portfolio.”
The Best Performing Thematic Funds
VanEck Crypto&Blckchan Innovtr ETF A USD
• Morningstar Category: EAA Fund Sector Equity Technology
• Sub-Theme: Blockchain
• Medalist Rating: Bronze
The passively managed VanEck Crypto & Blockchain Innovators UCITS ETF (DAPP) ended the past year up 141.96%, outperforming the average fund in the equity technology category, which rose 25.67%. The £101.9 million fund has gained 12.92% year to date, while the average fund in its category is up 8.56%.
Global X Blockchain ETF USD Acc
• Morningstar Category: EAA Fund Sector Equity Technology
• Sub-Theme: Blockchain
• Medalist Rating: Bronze
Over the past year, the passively managed Global X Blockchain UCITS ETF (BKCH) rose 129.9%, while the average equity technology fund gained 25.67%. The £11.7 million fund has climbed 10.54% year to date, outperforming the average fund in its category, which rose 8.56%.
WisdomTree Blockchain UCITS ETF USD Acc
• Morningstar Category: EAA Fund Other Equity
• Sub-Theme: Blockchain
• Medalist Rating: None
The WisdomTree Blockchain UCITS ETF USD Acc (WBLK) was launched in 2022. Over the past one year, the ETF was up 103.15%. Meanwhile, from the start of 2024 to the end of March, the fund grew 17.95%. The £2.8 million fund is the third best performer so far this year of the thematic top 10.
iShares Blockchain Technology ETF USDCap
• Morningstar Category: EAA Fund Sector Equity Technology
• Sub-Theme: Blockchain
• Medalist Rating: Gold
The passively managed iShares Blockchain Technology UCITS ETF (BLKC) ended the past year up 91.21%, outperforming the average fund in the equity technology category, which rose 25.67%. The £38.7 million fund has lost 4.94% year to date, while the average fund in its category is up 8.56%.
Grayscale Future of Finance ETF USD Acc
• Morningstar Category: EAA Fund Sector Equity Financial Services
• Sub-Theme: Blockchain
• Medalist Rating: Neutral
The £1.3 million Grayscale Future of Finance UCITS ETF (GFOF) rose 77.22% over the past year. The gain on the passively managed fund beat the 25.88% gain on the average fund in the equity financial services category. Year to date, the HANetf fund is up 5.86%, while the average fund in its category is up 9.6%.
The Worst Performing Thematic Funds
Electric Vehicle Charging Infras ETF Acc
• Morningstar Category: EAA Fund Sector Equity Infrastructure
• Sub-Theme: Charging Infrastructure
• Medalist Rating: Bronze
Over the past year, the passively managed Electric Vehicle Charging Infrastructure UCITS ETF (ELEC) fell 59.19%, while the average equity infrastructure fund lost 0.78%. The £1.1 million fund has dropped 18.35% year to date, underperforming the average fund in its category, which rose 0.11%.
Global X Hydrogen ETF USD Acc
• Morningstar Category: EAA Fund Sector Other Equity
• Sub-Theme: Hydrogen Economy
• Medalist Rating: None
Global X Hydrogen ETF USD Acc (HYGN) tracks the Solactive Global Hydrogen v2 USD index and over the past one year period, it has fallen 51.93%. The £3.6 million ETF, which launched in 2022, fell 20.29% this year alone.
Invesco Solar Energy ETF
• Morningstar Category: EAA Fund Sector Alternative Energy
• Sub-Theme: Solar
• Medalist Rating: Neutral
Over the past year, the passively managed Invesco Solar Energy UCITS ETF (ISUN) fell 42.99%, while the average equity alternative energy fund lost 17.57%. The £51.1 million fund has dropped 14.58% year to date, falling further than the average fund in its category, which fell 4.77%.
Global X Solar ETF USD Acc
• Morningstar Category: EAA Fund Sector Alternative Energy
• Sub-Theme: Solar
• Medalist Rating: Neutral
The passively managed Global X Solar UCITS ETF (RAYZ) ended the past year down 42.5%, falling further than the average fund in the equity alternative energy category, which fell 17.57%. The £2.5 million fund has lost 9.48% year to date, while the average fund in its category is down 4.77%.
BNP Paribas Env Abs Rtn Th Eq EAR Cl C
• Morningstar Category: EAA Fund Long/Short Equity – Global
• Sub-Theme: Broad Thematic
• Medalist Rating: None
BNP Paribas Environmental Absolute Return Thematic Equity is the worst performer out of three open-ended funds in the bottom 10 list, losing 42.46% over the past one year, 22.40% of which was this year. The £12.5 million fund has an ongoing charge of 1.83% and is the cheapest of the three active funds.
As part of our mission to put more information into the hands of investors, this article was partially generated by Wordsmith, an automated smart-text platform, using Morningstar’s data. Written and edited by Sunniva Kolostyak.
