The European thematic funds closed 2022 with $283.4 billion in total assets under management, with a decrease of 26% compared to the previous year. This is what emerges from the analyzes carried out by WisdomTree, according to which the market share of ETFs remains stable at 13.5%.
In Europe, thematic flows were positive in the fourth quarter, at $1.5 billion, for an annual total of $13.1 billion, indicating a strategic rather than tactical use of thematic products in investor portfolios.
Focus on sustainability and AI
Themes related to climate change and sustainability continued to attract investors, garnering the majority of flows in Europe, with $2.2 billion in the fourth quarter and $12.9 billion in inflows year-round.
Furthermore, in 2022, the topic relating to sustainable energy production, linked to energy transition megatrend, recorded the largest positive flows, with 3.9 billion dollars in all sectors. Overall, “green themes” dominated, with four of them raising flows exceeding $1 billion.
Among the technological topics, those ofartificial intelligence/big data and cybersecurity were the only ones to exceed one billion dollars in positive flows.
In terms of performance, the only themes to outperform the entire equity market in 2022 were agriculture, natural resources and the aforementioned sustainable energy production. Technology themes ended the year with net outflows of -$0.6 billion in the fourth quarter.
However, AI/big data, cybersecurity and semiconductors were in the front row, collectively raising around $0.5bn, unlike robotics/automation, the worst-flowing theme into both ETFs and mutual funds.
In the fourth quarter, 15 themes beat the marketwith a notable presence of themes from the field of demographic and social change in the top 5, with the theme related to the aging of the population topping the pack.
“Later in the year, thematic equity strategies delivered their best quarter of 2022, with 15 themes beating the market over the period. However, the dispersion of performance across themes and across strategies within themes remained high. Looking to 2022, environmental pressure themes dominated the industry, delivering the best performance and raising the largest number of assets with more than 14.5 billion dollars”; comment Pierre DebruHead of Quantitative Research & Multi Asset Solutions, Europe, WisdomTree.
Thematic ETF boom
“Wealth managers have continued to increase thematic offerings in Europe, prompting a growing adoption of thematic strategies in investor portfolios. In 2022, a record number of 62 thematic ETFs. In the mutual funds sector, asset managers have introduced 106 new strategies, below last year’s record (137)”, concludes Pierre Debru.