Home/Blogs/What is the idea behind Thematic Investing

What is the idea behind Thematic Investing

05 Jan 2023

Financial markets are filled to the brim with investment opportunities. If you are a novice, you may be quite intimidated with the wide variety of options before you. Creating an investment portfolio may be your ultimate goal, but it is no walk in the park. This is why it is useful to get a handle on various types of strategies to invest, selecting appropriate investment choices accordingly. Nowadays, thematic investing is one of the latest strategies, but what is the idea behind it? Let’s take a look. 

  • What is thematic investing

Explained as a ‘top-down’ investment technique, thematic investing meaning is tied to a strategy that is focused on broader, macroeconomic variables that are part of the economy. Specifically targeting investors with a long-term approach, it emphasizes on the identification of long-haul expectations and investing with this in mind. Simply put, the strategy involves the identification of particular themes that have the potential to trend upwards in the future, near or far. 

  • Explanation by Example

As in any trading you indulge in, the first step in the process is to undertake demat account opening. You can do this by visiting one of the most reliable online brokers like Motilal Oswal, and get access to its trading portal linked to your demat account. After this, you can start your trading activity, using the thematic investing strategy. Understanding this approach well is the key to mastering it, so here’s an example to clear any doubts. In the present digital age, technology and its advancements are on the upswing. A bright future is predicted for service providers in the digital industry segment. An investor realizing this will capitalize on the theme of digitization-oriented firms and invest in some of these. So you can see from this that an investor who adopts thematic approaches has certain expectations and beliefs.

  • How a Thematic Investment Portfolio is Established

Investment choices in an investment portfolio, with thematic investing considered, are diversified, but in a narrow way. In plain terms, they are diversified only  across stocks that are aligned with the purpose of a theme. So, the first step towards implementing this approach and forming a portfolio is to identify the theme (or themes) to be invested in. After you have done this, you have to select the stocks that match the theme. In case you face problems doing this, there are several thematic funds to make your decisions easier. 

  • Work with a Theme

Thematic investing meaning is easily understood, but the challenge is to dig out stocks that are aligned with themes. This is a value-oriented kind of investing tool, and retail investors can make use of an expert, such as a fund manager. Analysts and fund managers do fundamental analysis and logically identify securities that run in parallel with a theme. Thematic investing offers a concentration of investment and you can identify securities on platforms like Motilal Oswal, with help from the learning videos and blogs it offers. 


Checkout more Blogs

You may also like…

Get Exclusive Updates

Be the first to read our new blogs

Intelligent investment insights delivered to your inbox, for Free, daily!

Open Demat Account
I wish to talk in South Indian language
By proceeding you’re agree to our T&C