What impact could natural language processing (NLP) have on equity portfolio management? We explore how firms’ thematic exposures, assembled with an assist from NLP, can bring unique insights to portfolios.
Intro text - Thematic Investing 2023
What is Thematic Investing?
Thematic investing is a top-down investment approach that relies on research to explore macroeconomic, geopolitical and technological trends. These trends encompass long-term, structural shifts arising from new business models, disruptive technologies and changing consumer tastes and behaviors—megatrends that have the potential to change whole industries and shape the way we will live, work, travel and treat disease in the future.
Thematic investing is intentionally future focused around specific emerging trends that are expected to evolve over time. The investment process aims to identify companies that may be well positioned to benefit from these trends and offers an alternative to analyzing companies beyond cycles, region, country or sector.
Our Thematic Indexes offering
Our suite of thematic indexes aims to represent the performance of companies affected by various themes. We have identified four megatrend categories that many believe capture the dynamic forces shaping our future—trends that have the power to transform global economies. These include Environment & Resources; Transformative Technologies; Health & Healthcare; and Society & Lifestyle.
Thematic Investing - Footnotes
* Developed in collaboration with ARK Invest
** Part of the Circular Economy suite of indexes
Sub-themes - Thematic Investing 2023
The thematic index objective is captured via subthemes underlying a broad thematic idea. The subthemes are accessed through granular concepts and keywords. To know the complete list of sub-themes covered in our thematic indexes.Learn more(PDF, 317 KB) (opens in a new tab)
Application - Thematic Investing 2023
Thematic Investing application
Unlike traditional, backward-looking investment approaches that focus on ‘past winners’, Thematic Investing reflects a future world that may be very different from the past. Our thematic indexes directly capture themes across a range of subjects using our rules-based methodology.
To capture these future-forward themes, MSCI has brought together a panel of respected industry experts, our own research team, and our robust, rules-based, structured index construction approach, to support clients seeking to uncover the opportunities these long-term trends may hold. Our thematic index construction is designed to be flexible, scalable and customizable and allow for combinations of multiple themes or sub-themes.
ETFs are now available on almost all our megatrend indexes and we are seeing an increasing licensing demand globally.
Understand and manage targeted exposure to longterm structural trends and effectively benchmark performance.
Choose from a comprehensive range of thematic indexes to support structured product build around in demand megatrends.
Respond to the demands of asset owners and understand your portfolios exposure to key, long-term change.
A wide variety of financial products and services are based on or use MSCI Thematic Indexes. Client license for standard as well as custom versions based on their investment objectives. To find out more, download the list of clients (PDF, 138 KB) (opens in a new tab).
Our solutions - Thematic Investing 2023
Our solutions in action
To meet demand for greater insight and transparency into the digital assets space, MSCI has introduced new Digital Asset Indexes as well as datonomy™, a new digital assets classification system.
MSCI Thematic Exposure Standard is designed to help investors identify, measure, and leverage the emerging, long-term secular trends shaping our future.
MSCI’s suite of Circular Economy Indexes offers a new way to think about your portfolio as the transition to a circular economy drives innovation and new business models.
Our suite of MSCI Life Sciences Indexes aims to represent long-term, future-focused themes that are expected to disrupt the life sciences, biotechnology and pharmaceutical industries.
Collaboration - Thematic Investing 2023
Collaboration with Industry Experts
Our culture of collaboration enables us to capitalize on the expertise of third-party domain specialists. By leveraging their specialty knowledge in an advisory capacity, we endeavor to capture nuances of these themes as they evolve. Such insights also enable us to provide investors greater context and deeper insights to better inform your investment decisions.
Thematic Investing requires in-depth research to build a deeper understanding of the underlying drivers of value creation and risk. In addition to our inhouse research, we collaborate with experts on themes to draw on their insights and act as a sounding board. Such expert insights aid in ensuring that we capture themes as they evolve. Their input is advisory only in nature.
To develop a wide range of offerings, MSCI recognizes that new thematic indexes require cutting-edge data as inputs, to drive value creation and understanding of risk.
Featured content - Thematic Investing 2023
Watch our latest Asset TV video where experts share their views on the innovation in the field of Genomics and how this forward looking theme may provide investors with investment opportunties.
Thematic investing has become increasingly popular with institutional and retail investors. We review the concept and how it differs from factor and ESG investment processes. Additionally, we lay out how we model various themes to build a rule-based index methodology representing the performance of companies exposed to a certain trend.