Investing with Thematic ETFs

Invest Thematically

What is Thematic Investing?

Thematic investing focuses on predicted long-term trends rather than specific companies or sectors, potentially enabling investors to access structural, one-off shifts that can change or create an industry.

Identifying opportunities for structural change and investing in expected transformations early (such as the rise of the internet in the 90s) may be a key driver of successful investing. This is particularly important for long-term investors seeking to include growth opportunities in their portfolios.

Thematic exchange traded funds (ETFs) target stocks positioned to benefit from potential shifts in technology, society, the environment and demographics over time.

ETFs are transparent and easy to own, removing the pressure of trying to pick single-stock winners or the price of privileged access to private markets. ETFs are credible and attractive investment vehicles that appeal to a wide range of clients. To learn more about ETFs and the risks associated, visit our education centre here.

Thematic ETFs are distinct from broad market and factor exposures and can be viewed as alternatives and/or complements to individual stocks or sectors.

Access Global Healthcare

The healthcare sector has risen in prominence since the outbreak of COVID-19 owing to unprecedented demand for medical equipment and medication and the potential return offered by vaccines and other viral treatments.

iShares Global Healthcare ETF (IXJ) provides access to a broad range of healthcare stocks including pharmaceutical, biotechnology, and medical device companies, while helping diversify and build defense into portfolios.

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Why Healthcare?

Investing in innovation
Investing in innovation
Research and development is accelerating across the sector owing to the COVID-19 pandemic.
Long-run structural demand
Long-run structural demand
Ageing populations and growing wealth in emerging markets seem set to drive persistent demand in the sector.
Getting Defensive
Getting Defensive
The healthcare sector is characterised by relatively low beta to the broader market with resilience in late cycle and recessionary environments.

Investment considerations

Investment risk: whilst diversified across the sector, the risk is the sector is out of favour vs. the market and underperforms.

Policy risk: Healthcare is a heavily legislated sector and policy changes can positively or negatively impact the sector.

Concentration risk: whilst diversified across 100+ stocks some of the holdings are of a reasonable size e.g. 5%+.

Access Technology

Technology has expanded far beyond electronics or software firms that are typically associated with the sector. Instead it cuts across all areas of the global economy, from retail to finance and the Covid-19 pandemic has spurred adoption of new modes of work within businesses.

Discover how you can access a broad range of ETFs with high technology exposure across industries where technological advancements have been further accelerated.

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Why Technology?

Disruptive innovation
Disruptive innovation
AI, Cloud Computing, 5G, Electric Vehicles are examples of the ongoing innovations that may impact the way we live structurally.
Favorable profit margin
Favourable profit margin
Unmatched and stable earnings growth have previously driven returns of technology stocks.
Strong growth with high quality
Strong growth with high quality
Tech firms with low leverage and high cash levels may offer investors both growth and quality.

Investment considerations

  • Investment risk: Outcome of the November election posts key risks on policies and regulations related to major tech players e.g. corporate tax rates, data privacy law.
  • Geopolitical risk: Tensions between US and China post risks of interruption on supply chains of hardware components and international trade.

Access Asia

This year’s Covid 19 pandemic has had a significant impact on global economic growth and caused a dislocation in regional equity returns. Asian equities have generally recovered robustly from the pandemic with north Asia specifically benefitting from a strong tailwind to technology stocks.

Access the Rise of Asia with iShares ETFs that give you exposure to a broad range of regions and Emerging Markets.

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Why Asia?

Covid recovery
Covid-19 recovery
With China leading the recovery from a Covid-19 driven recession, Asian economies may experience potentially strong growth in 2021 and beyond.
Leading innovation
Leading innovation
Mainland China, South Korea and Taiwan are world leaders in the fast growing technologies such as 5G and fintech which may continue to drive structural changes.
Attractive valuations
Attractive valuations
Asian indices are trading at historic low valuations which may offer earnings growth.

Investment considerations

  • Geopolitics: Tension between the US and China remains a key risk when investing in Asia.
  • Covid-19: Any resurgence of Covid-19 in Asia will post risks in slowing down the region’s economic recovery.

Access Global Markets

From Covid-19 disruption to trade tensions, there can be little doubt that the world is becoming more fragmented. International investing – meaning portfolio construction with diversified geographical exposure - may be a source of return and resilience in a world of unknowns. The unprecedented uncertainties in the market are changing the nature of alpha generation - diversification is now key to portfolio outperformance and resilience.

Access Global Markets with iShares ETFs that give you exposure to a broad range of regions and add diversification to your portfolio.

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Why Go Global?

Covid recovery
Covid-19 recovery
Despite Asia leading the global economy out of a Covid-19 driven recession, cases in Europe and North America have started to spike again into the winter.
Policy divergence
Policy divergence
The fragmentation of global policy support makes a diversified portfolio ever more crucial.
Valuations differential
Valuations differential
Covid-19 has had a bigger impact on company earnings in developed markets while Asia has seemingly been more resilient.

Investment considerations

  • Geopolitics: Global or regional geopolitics tension remains a key risk.
  • Covid-19: Any resurgence of Covid-19 will post risks in slowing down global economic recovery.
  • There is no guarantee that a positive investment outcome will be achieved.