A Look at the Mushrooming Menu of Thematic Funds
Thematic funds have captured investors' imagination and their assets, but buyers should beware.
The menu of thematic funds has mushroomed in recent years. These funds attempt to harness secular growth themes ranging from artificial intelligence to cannabis. The result has been a steady supply of greater complexity from asset managers and increased demand for greater clarity among investors. In our recently issued report on the global thematic funds landscape, we introduced a novel taxonomy for classifying these funds. Here, with help from this framework, I’ll analyze key trends in the U.S. thematic funds' landscape. I’ll finish by sharing best practices for choosing from this expansive universe.
Defining the Universe of Thematic Funds
We have defined the universe of thematic funds as those that select holdings based on their exposure to one or more investment themes. These themes may pertain to macroeconomic or structural trends that transcend the traditional business cycle. Examples include demographic shifts or technological advances.
Ben Johnson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.