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Thematic Investing: Choose What You Believe In

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For many prospective investors who are new to the space, investing seems like a way to make money and not much more. In fact, it could be considered a job—and for those who can afford it, it can quickly become an actual job and the main source of income. On the other hand, just like with careers, the ultimate choice is always ours. With the right broker, you don’t have to invest in something that only seems like it will make a profit; you can choose projects you actually believe in, those that align with your lifestyle and personal values, and still have a great portfolio.

What Is Thematic Investing?

As its name implies, thematic investing is the practice of investing in assets that all belong to the same trend that they may benefit from. They usually focus on long-term trends rather than specific companies themselves, but they also tend to be quite concentrated in one segment of the economy.

To start thematic investing, first you need to identify macro-level trends that may be of interest to you. These can be something technological that’s currently changing and you think it may take off; it can be environmental, like water shortages and solutions to that; it can relate to alternative energy sources and their potential; etc. The possibilities are almost unlimited, but the important thing is recognizing an area with potential, making a prognosis of where that area is headed, and then choosing your future investments based on both your personal beliefs and the expected appreciation of the assets.

On the other hand, thematic investments can be slightly more risky than other types of investments. Where mutual funds will have high diversification, thematic investments will be focused on a key area. However, higher risk often equals a higher potential for profit; if the key area from your thematic investment performs well, the returns are very likely much higher than what mutual funds are able to deliver.

Examples of Thematic Investing

There are many possibilities when it comes to thematic investing. With a good broker, nothing is unattainable: eToro has created unique long-term investment portfolios that each encompass a trend or industry for which experts have predicted excellent future growth. Each portfolio comes pre-diversified, but all the assets still correspond to a central theme, which lowers the risk while maintaining cohesion.

Here are some examples of what you can find on eToro:

  • CyberSecurity. With the threat of cyberattacks present now more than ever, this portfolio offers exposure to innovative cybersecurity companies from around the globe.
  • CryptoPortfolio. For those who would rather have a broker decide which assets to get, this portfolio incorporates a diverse selection of large-cap cryptocurrencies, weighted by percentage of each crypto’s market cap.
  • RenewableEnergy. Today, many believe that the current energy system is unsustainable, so renewable energy is gaining significant traction in the mainstream. This portfolio provides exposure to leading global companies offering renewable energy solutions, including solar power, for residential and commercial use.
  • RemoteWork. If you worked in an office before the pandemic, chances are you had to switch to remote work at some point. This portfolio is focusing on growth drivers making remote work an integral part of our lives, and offering exposure to a broad range of innovative companies.
  • Driverless. Transportation may change for good with constant, ongoing innovations in the automotive industry, and if you believe in this opportunity, this portfolio is a great choice.
  • BigTech. Do you believe tech giants will keep growing? This portfolio may be the choice for you, as it offers exposure to top stocks in entertainment, e-commerce, software solutions, telecom and more.

These are only some of the portfolios eToro offers. The full list is available on their website, and each portfolio also shows its returns in the past 12 months in a transparent manner, which can help potential investors narrow down their choice.

79% of retail investor accounts lose money when trading CFDs with this provider. Cryptoasset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Past performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision.

Copy trading is a portfolio management service, provided by eToro (Europe) Ltd., which is authorised and regulated by the Cyprus Securities and Exchange Commission.

Cryptoasset investing is unregulated in some EU countries and the UK. No consumer protection. Your capital is at risk.

eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro.