Newsletter: Thematic Funds Compass: Helping investors navigate the Thematic Investing Universe

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– Thursday 27 April 2023 –
Thematic Funds Compass: Helping investors navigate the Thematic Investing Universe Thematic rotations : A new indicator of investors expectations? Thematic Investing : Separating the wheat from the chaff with BSD Investing new leaderboards Three new approaches to construct thematic portfolios by MSCI Future-proofing your tech exposure, A fresh take on the technology megatrends in 2023 by WisdomTree Exclusively included in this edition: Discover BSD Investing new leaderboards that rank both active and passive thematic funds with a special focus on Global Thematic funds. Thematic funds have attracted investors’ interests due to their unique ability to tap into human’s innate need for stories. In this edition, we will answer the following questions: Is this interest still strong at the beginning of 2023? What Thematics gathered the most flows? Can thematics flows rotation be considered as a good indicator of market sentiment and investors expectations? How to select the right thematic? How to rank thematic funds without the limitation of current lack of nomenclature standardisation? How can portfolios be constructed to capture innovation-driven themes while providing a suitable level of capacity and liquidity? Does tech thematics overlay have the potential to improve an equity portfolio’s Sharpe ratio.

Marlene Hassine Konqui	Ahmed Khelifa, CFA
Expert in portfolio construction Co-head of the SFAF ETF commission Associate Director General BSD Investing	Asset allocator Head of the SFAF ETF commission CEO L’allocataire

	THEMATIC INVESTING : SEPARATING THE WHEAT FROM THE CHAFF WITH BSD INVESTING NEW LEADERBOARDS
	Thematic funds have attracted investors’ interests due to their unique ability to tap into human’s innate need for stories. Is this interest still strong at the beginning of 2023? How to select the right thematic? How to rank thematic funds without the limitation of current lack of nomenclature standardisation? What are the best active and passive thematic funds on Global Thematic funds based on BSD investing leaderboards? Discover all the answers by clicking here.
	THEMATIC ROTATIONS : A NEW INDICATOR OF INVESTORS EXPECTATIONS?
	In a complete reversal from last year trends in the thematic investing universe, open-ended funds and ETFs have gathered the most flows in the “Technological Shifts” cluster, in line with markets’ expectations of a pivot. Whereas in 2022, flows were directed into green themes as investors were looking for defensive exposures. Can thematics flows be considered as a good indicator of market sentiment and investors expectations? Do traditional growth indices and allocations capture the same growth exposure presented by thematic investing? We will answer all these questions and give you more insights in the following article.

	MARKET VOICE: THREE NEW APPROACHES TO CONSTRUCT THEMATIC PORTFOLIOS, BY MSCI
	Thematic investing is gradually becoming part of the institutional investor toolkit after primarily being popular among retail investors, some asset owners are even considering innovation investing in earlier stages of asset allocation. But several limitations and challenges other than returns volatility and dispersion exist. • Where does innovation investing fit in the asset allocation process? • How can portfolios be constructed to capture innovation-driven themes while providing a suitable level of capacity and liquidity? • How might a traditional allocation framework, such as sector, country and style factor, be adjusted to incorporate an innovation allocation? Mehdi Alighanbari, Ketaki Garg, Ashish Lodh and Saurabh Katiyar from MSCI answer all these questions by presenting three new approaches to construct Thematic portfolios in the following article.
	MARKET VOICE: Future-proofing your tech exposure, A fresh take on the technology megatrends in 2023 by WisdomTree
	The global value rotation resulted in the compression of multiples across a range of tech-focused thematics creating compelling growth/valuation opportunities in some themes. Discover in the latest report of Elvira Kuramshina Associate Director, Quantitative Research WisdomTree, how tech thematics overlay has the potential to improve an equity portfolio’s Sharpe ratio and the rational behind some of the thematics that outperformed in 2023 first quarter : “Future-proofing your tech exposure A fresh take on the technology megatrends in 2023”. Click here to read the full report.
	BSD Investing & L’Allocataire model portfolio update
	Combining active & passive funds to build optimal portfolios
	Click here to discover the performances of our dynamic portfolio allocation. Our mixed approach between active and passive management on this profile has generated an outperformance of 14% compared to the MSCI ACWI index (world equities) over 1 year (until 31/03/2023), and is up 9% year to date (against 5% for world equities). It is a factual proof that the combination of active and passive strategies is an under-exploited performance driver.


	LATEST NEWS Thematic investing: A new fund selection methodology by BSD Investing & L’allocataire Selecting a thematic fund today is a time-consuming exercise that relies more on the fund selector’s beliefs than on his analytical skills and competencies. This is mainly due to the absence of a simple and easily achievable methodology. We propose in this article a solution that meets this methodological need. Click here to discover our new methodology.

	LATEST NEWS Thematic investing: what place in investors’ portfolio? Are thematic funds new vehicles? What do thematic funds represent in European asset management? In the difficult context of 2022, have flows into these funds maintained the same momentum? What were the winning and losing themes in 2022? What are the challenges of thematic investing for the fund selector? Read our full flows & assets report on thematic investing.

	LATEST NEWS Thematic investing: what lessons from the past for portfolio construction? Our new thematic fund selection methodology first answers key questions that are still debated today: Should investors choose a fund invested in a broad or in a specific theme? What is the importance of the timing for investing in Thematic funds? Should investors choose an active or passive management thematic fund? All our answers by clicking here.

Disclaimer
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