“Some companies have thematic investing at their core, others have a range of thematic funds, and others have standalone thematic funds. Henderson has a range of funds which have sustainability, environment and social themes at their core; Pictet has nine megatrends within its Global Megatrend Selection fund; and Fidelity and JPMorgan have launched specialist funds based on the global consumer, but generally don’t have thematics as the core for most of their fund range.”
Jan Luthman, co-manager of the Liontrust Macro Equity Income fund with Stephen Bailey, says a belief that macro-thematic analysis offers scope to add long-term investment value is at the core of his investment philosophy.
He adds: “Today’s macro themes are both unprecedented and powerful. Major themes such as globalisation, population ageing and environmental change have significant implications for economies and businesses. Structuring a portfolio so it fits with the forces that are reshaping national and international economies allows it to ‘sail with the wind’; ignoring or misinterpreting these themes can condemn a fund to perpetually sailing against unseen and misunderstood tides.”
As a way of investing, themes – like all approaches – has its ups and downs, but it can be beneficial for a long-term investor, with some themes looking to reach maturity up to 20 years in the future.
Mr McDermott says: “I think having themes as part of the investment process is a good idea, particularly for the longer term, which is what investing is supposed to be. I wouldn’t expect key themes to come good in one or two years – they are areas that will develop over multiple years. Therefore, anyone investing in this idea should be prepared for the long haul.”