Thematic investing:  what lessons from the past for portfolio construction?

12 January 2023

Based on BNPP AM, Invesco & WisdomTree market insights and our proprietary research, we have provided a simple and easily achievable methodology that does not require a new nomenclature for efficient selection of thematic funds. We detail below the first conclusions that can be drawn based on this methodology.

Having a clear vision of what the past teaches us is key to making efficient allocation decisions. To do this, we have used our thematic fund selection methodology set out in the article: “Thematic investing: a new fund selection methodology by BSD Investing and L’allocataire” as well as the BSD Investing methodology to compare active and passive funds, on all funds domiciled in Europe index and non-index according to their initial investment universe.  At this stage, we have listed 5 investment universes: Global, Developed Countries, Europe, Eurozone, Emerging Markets and Asia ex Japan and analyzed the risk-return profiles of the different thematic funds for each of these universes.

Our research has allowed us to answer three fundamental questions about thematic investing at this stage:

1. Should investors choose a fund invested in a broad or in a specific theme?  The selection of the theme counts

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Marlene Hassine Konqui & Ahmed Khelifa, CFA