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Thematic investing - what is it
What it is, and is not
Thematic investing is a top-down investment approach, designed to capitalize on opportunities created by macroeconomic, geopolitical and technological trends that are both structural and transformative in nature. The investment approach offers investors a whole new way to capture powerful global trends that may drive future stock performance. Thematic investing is not a sector, factor or ESG strategy; nor is it bound by conventional geographic or industry classifications, such as style or market capitalization. Rather, it is an investment approach that takes a long-term view of how trends can change prevailing business models and value chains while facilitating investor access and exposure to growth themes of the future.
How thematic investing differs from traditional approaches
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Applies a forward-looking lens to investment decisions:
Focuses on how the changing world around us may impact businesses and companies.
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Entails a top-down investment approach:
Relies on precisely articulating the investment objective, then selecting companies that may benefit if themes play out or profit from the wider adoption of the theme.
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Requires distinct research:
Focuses on structural themes, evolution and investment opportunities.
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Reconsiders security selection:
Security selection and weighting decisions are driven by a company’s exposure to a theme as measured by its economic relevance scores, rather than market cap alone.
thematic paper
Indexing Change: Understanding MSCI Thematic Indexes
In this paper, we review the concept of thematic investing and discuss the differences between it and the factor and ESG investment processes. We then lay out how we model various themes in order to build a rule-based index methodology that represents the performance of companies exposed to a certain trend.
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Our Thematic Indexes
Our Thematic Indexes
Assessing a portfolio through a thematic lens represents a new way of understanding the structural changes happening around us and translating them into a long-term investment strategy. MSCI’s thematic indexes are constructed by including companies that may be impacted by emerging macroeconomic, geopolitical or technological trends. Our indexes are constructed using a rules-based methodology that is scalable and flexible.
thematic investing product cards
Megatrends
Macro-Economic Themes
Megatrends
Macro-Economic Themes
Our Latest Research
Our Latest Thematic Insights
Our pandemic reflection insights capture the impact of COVID-19 on our themes, as this has profoundly impacted people’s lives, families, communities and the global economy - and its future evolution remains uncertain. We discuss this in our series of insights focusing on themes relevant to you.
Nested Applications
Digital economy
disruptive technology
future mobility
Nested Applications
smart cities
Genomics
Millennials
Nested Applications
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Our Approach - title
Our Approach
Our Approach to Thematic Indexes Sets us Apart
Our Approach to Thematic Indexes Sets us Apart
Constructing thematic indexes
Our thematic indexes directly capture the theme using a rules-based methodology that is scalable and flexible. We leverage new technologies and machine learning to accelerate index development.
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Applications
Applications for our Thematic Indexes
Applications for our Thematic Indexes
MSCI’s thematic investment framework is highly customizable and can be quickly adapted to a variety of products and models. Institutional and high-net-worth investors alike use different approaches to implement thematic investing into their investment process—including thematic allocation to act as a hedge for existing positions; an implicit underweighting to companies facing disruption; a source of uncorrelated returns and diversification.
Theme experts
Our Theme Experts
Our Theme Experts
Our Theme Experts
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 work with leading experts on themes to draw on their insights and act as a sounding board.
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Contact Us
If you would like further information about Thematic Investing, please reach out to your MSCI representative.
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