Thematic funds are increasingly attracting the interest of investors. Too simplistic to define them as a trend in the sector, this structural change highlights a fundamental change in the approach to asset allocation, which moves from a focus on asset classes, geography and the business sector, to a more investment-oriented approach.
A significant change of pace also photographed by a recent survey by BNP Paribas Asset Management conducted by Greenwich Associates, according to which 88% of “wholesale” investors and 36% of institutional investors already use or plan to use thematic strategies. In addition, nine out of ten investors believe that thematic investing has a positive impact on long-term performance. The analysis shows that the main objective declared by investors, who choose thematic strategies, is to direct investment in sustainability and ESG criteria (76%), followed by ability to increase investment returns (42%), from desire to adopt a more innovative or disruptive investment approach (36%) or finally dfor the purpose of pursuing an increase in diversification (30%).
“The growth in thematic investing has been remarkable, tripling between 2017 and 2020, with significant support from distributors and private investors. We expect this trend to accelerate, driven by the upcoming regulatory change, including the integration of ESG preferences into investor choices under Mifid II, as well as the growing demand for thematic strategies from institutional investors “, comments Pierre Moulin, executive committee member and global head of product & strategic marketing of BNPP AM.
Sustainable thematic investing is on the rise
The demand for sustainable thematic funds grows as investors want their investments to have a positive impact on the world around them. Sustainability and ESG criteria were identified by the majority of respondents, with the prevailing preference for the United Nations Sustainable Development Goals (41%), followed by solutions to climate change (21%) and renewable energy (18%). “This acceleration – explained by BNPP Paribas AM – reflects the broader trend in the asset management sector and the regulatory context and support public policies, which include initiatives such as the Sustainable Finance Disclosure Regulation, “SFDR”), the EU Taxonomy, the EU Green Deal and the priority given by the Biden administration to reducing the US carbon footprint and achieving a zero net emissions level “
There is also a greater interest in the themes of technology and innovation. And in these two areas they were identified by the interviewees as the most interesting: the salute (28%), the robotics e artificial intelligence (23%) and the disruptive technologies (13%). Over 50% identified these three themes as considered the most interesting, followed by other “disruptive” trends such as cyber-security, biotechnology, 5G and smart cities.