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To learn more about Thematic Funds and how Morningstar’s data sets can help identify opportunities, the following resources are free to download: Users can now quickly identify and conduct direct peer comparisons between funds claiming to pursue similar thematic strategies. Users can isolate all funds that track a given theme, such as cybersecurity, or demographics at the click of a button.īy mapping the thematic fund universe, Morningstar is helping users cut through the noise and make more informed investment decisions. Going through our universe of more than 100,000 mutual funds and ETFs, we’ve identified and grouped thematic funds, into searchable Broad Themes and Themes. Morningstar has developed a thematic funds dataset that meets this need by allowing users to easily track assets and asset flows, and analyse fund details for one or more investment themes. Until now, there hasn’t been a tool allowing investors to perform direct peer analysis. The proliferation of thematic funds, while offering a vast array of choice, has increased the demand for clarity amongst investors trying to make sense of the waves of products coming to market. It is worth noting that, while a fund can close for many reasons, rarely does a fund close when it has been performing well. More than three quarters of the thematic funds available to investors at the onset of that period have since been closed. However, thematic funds' success rate drops to just one in 10 when we look at the trailing 15-year period. When we look at data up to the end of the last year (2021), more than half of the thematic funds in our global universe both survived and outperformed the Morningstar Global Markets Index over the trailing three years. Historically, thematic funds have struggled to survive and outperform global equity markets over longer periods, and the concentrated nature of these strategies tends to cause higher volatility returns. Popularity Won’t Guarantee Performanceĭespite all of the enthusiasm for thematic funds, it’s important to keep things in perspective. In late 2020, the promise of huge government spending plans announced by the incoming Biden administration in the US prompted massive inflows into funds with an energy transition theme.ĭespite a subsequent drop in net flows, funds seeking to profit from the transition away from hydrocarbon-based energy sources, such as alternative energy funds, have risen to become the second-most popular theme grouping in the region. The booming popularity of ESG in Europe has also spilled over into the world of thematic investing.
When we look at the European market, Broad Thematic funds make up the most popular theme grouping by assets.
Strong performance, persistently high inflows, and an abundance of new launches powered the rapid growth. Thematic funds have tripled their share of global equity fund assets to 2.9% in the 10 years to mid-2022, with Europe currently being the largest market accounting for 55% of global thematic fund assets.
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