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Watch Out for Investment Biases in Thematic ETFs

Despite their rise in popularity there remain questions about how to evaluate and integrate thematic ETFs

Kenneth Lamont 17.01.2019

Artificial intelligence, orphan drugs and battery value-chain are just some of the attention-grabbing themes tracked by exchange-traded funds launched already this year. These new entrants join established thematic funds such as robotics and water strategies. Despite their rise in popularity there remain questions about how to evaluate and integrate these products into an existing portfolio.

What are Thematic ETFs?
Thematic ETFs select listed companies based on their exposure to long-term environmental, technological or social trends.

The key to thematic investing is identifying future trends before they are fully recognised by other investors and captured in the current equity prices.

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About Author

Kenneth Lamont  Kenneth Lamont is a Passive Funds Research Analyst for Morningstar Europe.

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