Thematic funds grew by 77% in 2020 fuelled by the Covid-19 pandemic, according to research from Axa Investment Managers.
While thematic investing is still relatively new, thematic funds now contain around €572 billion of assets worldwide.
The research showed rising demand for different types of thematic investing around the world, with ‘multi-sustainable’ funds finding favour in Europe and emerging technology such as disruptive tech and AI & Robotics gathering pace in North America and Asia Pacific. Themes including security/ cybersecurity, fintech, semiconductors, connectivity and digitalisation have all been popular too.
Axa Investment Managers said the global pandemic had significantly accelerated many of the trends within the thematics sector and prompted the emergence of new ones.
Climate change was shown to be an increasingly important issue for many fund selectors, particularly in Europe, while digitalisation was also given a big boost.
The research also found that fund selectors use thematic products in varied ways and favour actively managed funds, with nearly three quarters (73%) of thematic assets being held in active as opposed to passive funds.
Axa Investment Managers said: “In the past, thematic funds were often seen as specialist or separate holdings, however increasingly, especially in Europe, they are used as a diversifier within global equity portfolios. Most investors see thematics as a long term or strategic investment with only one in four saying they use thematics in a tactical way.
“We believe thematic funds have already transformed the industry. While thematic assets represent a small part of the overall funds market, this corner of the industry has taken almost two fifths of all fund net sales since 2017 and it is not unreasonable to think it will continue to play an important role as we transition to this new normal of equity investing.”