Navigate our Thematic Range

What is thematic investing?

Thematic investing is an approach which focuses on predicted long-term trends rather than specific companies or sectors, enabling investors to access structural shifts that can change an entire industry. At the centre of BlackRock's Thematic investing philosophy lies 5 megatrends: rapid urbanisation, climate change and resource scarcity, emerging global wealth, demographics and social change – all driven by the final megatrend: technological breakthrough.

A confluence of these global megatrends is prompting structural shifts in many industries and changing the drivers of companies’ earnings.

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Thematic investing at BlackRock

BlackRock & iShares Thematic suite is positioned to access the long-term effects of these megatrends, offering both index and actively managed funds.

Our Thematic Research and Investment Group (TRIG) identifies long-term themes driven by one or more of the 5 global megatrends, as well as working with outside resources to look for trends. They then apply a repeatable process to decide if the theme is better suited to an index approach, or an active approach.

• Index: Narrow investment universe, low divergence between companies and few Initial Public Offerings (IPO).
• Active: Broad investment universe, high divergence between companies and many IPOs.

RISK: There is no guarantee that research capabilities will contribute to a positive investment outcome.

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Breakthrough innovation is necessary to address large-scale challenges (e.g. ageing economies, climate change), while new solutions are also targeting relatively minor problems (e.g. payments, streaming). This backdrop has created a fertile ground for disruptive innovation and Thematic investing.

Cities have always been hubs for talent, capital and innovation. In the last decade, hundreds of large cities have been built in emerging economies, attracting significant infrastructure investments. Understanding the advantages and challenges of future cities can help us identify sources of growth.

The forces that underpin this megatrend include ageing populations, the outlook for future jobs, immigration pressure, skills imbalance and different priorities of younger generations. Changes in global demographics will bring significant challenges and opportunities for societies and businesses.

An expanding population and the rising demand for food, energy and materials continue to strain the finite resources of the planet. The need for solutions that improve energy efficiency, lower food waste and provide alternatives to scarce resources has never been greater.

In the last twenty years, developing economies have been lifted by the rising tide of globalisation and manufacturing shifting. The emergence of a sizeable, aspirational middle class, particularly in China might offer significant growth potential for domestic and multinational firms.