In the ever-evolving landscape of investment strategies, thematic investing has emerged as a powerful approach, capturing the attention of institutional investors and intermediaries alike. Our 2024 Thematics Barometer, produced in in partnership with BNP Paribas Corporate Investment Banking Division and Coalition Greenwich, showcases significant trends and insights from nearly 200 institutional investors across Europe, Asia, and North America. Here, we summarize the key findings and implications for investment professionals
Understanding Thematic Investing
Thematic investing involves constructing portfolios centred around specific themes expected to drive structural changes in economies and business models. These themes often include climate change, technological innovation, resource scarcity, and social equity. The approach spans various regions, industries, and investment styles. It increasingly positioning itself as a mainstream strategy, particularly in Europe.
Key Findings from the latest Thematics Barometer
- Growing Adoption: The report revealed that 59% of respondents are currently using or are planning to use thematic investing strategies — up from 52% last year. Among intermediary distributors, this figure rose to 76%. Notably, institutional interest in thematic strategies has surged, with 50% of these investors now incorporating them into their portfolios.
- Regional Insights: The popularity of thematic investing is particularly pronounced in Europe, where about two-thirds of respondents are engaged in these strategies. However, significant growth has also been observed in Asia (51%) and North America (41%).
- Asset Class Allocation: Active equities remain the most common asset class for thematic investments. However, there is a noteworthy rise in interest in private markets, with the percentage of investors deploying thematic strategies at 10% or more of their portfolios increasing from 14% to 24%.
- Long-Term Focus: An overwhelming 95% of respondents indicate that they employ thematic investing for long-term objectives rather than short-term tactical gains, though with significant differences across regions.
Themes capturing investor interest
The report identified several appealing themes, highlighting that the relevance of these themes is crucial for investors. Key themes include:
Sustainability: Renewable energy and climate change solutions are the most sought-after themes, reflecting a growing investor focus on environmental responsibility.
Innovation: Artificial intelligence has surged in importance, alongside healthcare innovation and biotechnology.
The benefits of thematic investing
According to this year’s barometer, investment professionals perceive several benefits to thematic investing:
1. Positive Impact: A significant majority (91%) of investors see a connection between thematic investing and achieving sustainable outcomes.
2. Performance Potential: While short-term performance perceptions vary, 82% believe thematic investing positively influences long-term investment performance.
The report indicates that many investors plan to increase their focus on thematic strategies, particularly in equities and private markets, over the next three years.
This year’s report leads us to conclude that thematic investing is more than a trend; it is a strategic approach that aligns financial goals with broader societal objectives. For investment professionals, the message is clear: understanding and integrating thematic investing into portfolio strategies is not just beneficial; it is a means of navigating the future of investment successfully.
To read the report, visit our 2024 Thematics Barometer page.
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