Invest in long-term trends with thematic ETFs

Thematic ETFs can help investors gain targeted exposure to long-term structural trends that may not be fully reflected in traditional sector or regional allocations. They can be used alongside core portfolio holdings to express strategic investment views on specific themes.

Thematic ETFs seek exposure to companies that may benefit from transformative changes reshaping economies, industries and consumer behaviour. Rather than focusing on a single sector, thematic strategies can invest across multiple industries and geographies connected to a common theme, helping investors capture opportunities arising from structural trends over time.

Sector ETFs typically provide exposure to companies within a specific industry classification, such as technology or healthcare. Thematic ETFs, by contrast, seek to capture a broader investment opportunity linked to a structural trend. As a result, a thematic ETF may include companies from multiple sectors that are connected to the same long-term theme.

AI-focused ETFs can help investors gain exposure to companies benefiting from advances in artificial intelligence and digital disruption. These strategies may include businesses involved in AI development, semiconductor technology, digital infrastructure and other areas supporting the adoption of next-generation technologies. Investors may use AI ETFs to express a long-term view on productivity, innovation and technological transformation.

Many thematic strategies are built around structural changes expected to play out over years or decades. As a result, professional investors may use thematic ETFs as part of a strategic allocation designed to capture long-term investment opportunities associated with major economic, technological and societal shifts. The suitability of any investment depends on an investor's objectives, risk tolerance and portfolio requirements.

Thematic ETFs can provide an efficient way to access long-term investment themes through a single vehicle. For wealth managers and financial advisers, these strategies can help align portfolio allocations with identifiable trends while supporting client conversations around future growth opportunities and portfolio diversification.

When assessing thematic ETFs, investors may consider:

• The strength and durability of the underlying theme
• Whether the strategy is actively managed or index-tracking
• Portfolio construction methodology
• Concentration and diversification characteristics
• The role of the allocation within the broader portfolio
• Potential risks associated with the theme and market environment

As with all investments, capital is at risk and investors may not get back the amount originally invested.

Index-based thematic ETFs typically seek to replicate the performance of a rules-based index linked to a specific theme. Active thematic ETFs allow portfolio managers greater discretion in security selection and portfolio construction, potentially adapting to evolving opportunities and risks within a theme. The iShares thematic range includes both approaches

Thematic ETFs can help advisers and investment professionals connect portfolio allocations to long-term economic and societal developments that clients recognise and understand, such as artificial intelligence, demographic change, energy transition and financial innovation.