Thematic Investing is a way to make investment decisions based upon emerging themes — themes that are identified by looking at the intersection of shifting economics, demographics, psychographics, technologies, mixed with regulatory mandates and other forces. It is based on predictions about trends rather than on past performance of the market or the fundamentals of a specific company.
The closest comparison of thematic investment is Exchange Traded Funds (ETF’s). The thematic investment offers lot more flexibility over ETF’s as the companies to invest in a theme are identified by the broker, fund-manage or even a group of people in a community.
How does Thematic investing works?
The broker provides set of themes representing ideas i.e. I want to invest in industries in Gujrat.
The broker identifies a list of companies matching the theme. Each theme includes number of stocks.
Investor choose a theme and invest in it.
The broker invest the money in to the individual stocks part of the theme in the proposition identified in theme.
Theme: Muthoot Group of Companies
Stocks in this theme:
Muthoot Finance Limited – 50%
Muthoot Cap Serv Ltd – 50%
If customer invests in this theme, the money gets invested in 2 stocks, 50% in each one of them.
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