What is

thematic investing?

Why Themes (and not sectors)?

Investing according to themes gives investors access to those businesses that benefit from the structural and lasting changes we see in our world. We believe that the advantage of this approach is that these stocks are often better able to withstand general market volatility, as share prices are more closely linked to the theme than broader market factors.

If the chosen theme plays out as predicted, the share prices of individual businesses driving or harnessing change are often driven by the growth and momentum in the theme rather than the cyclicality and sentiment-led returns of wider equity markets. In other words, the underlying growth of a theme is the principal driver of its return for investors. Investing by theme can help navigate around the fixed categorisation of indexes, such as the S& 500, by providing access to companies across multiple categories or industries within one theme.

Real-world Themes

At First Trust we have identified two strongly-interlinked megatrends that we believe are set to dominate our landscape for the long term – human innovation and longevity. Within these major trends, disruptive technology – innovation that drastically changes the behaviours or operating habits of consumers and businesses – has been a prominent driver of change in the economy, inspiring multiple key themes we believe will fuel future profits.

A Fundamentally Different Approach to Thematic Investing

Now more than ever, the world is going through a huge number of transitions at high speed. As these rapid changes take place, new megatrends and themes are emerging - providing ample investment opportunities. We’re dedicated to identifying the strongest themes and the most prevalent disruptors, creating accessible investment opportunities across areas like IOT technology, clean energy, digital innovations and shifting consumer trends.

We’ve identified a number of key themes with the potential to positively impact our future - click on the icons below to discover more:

Internet

Internet & E-Commerce

E-commerce has revolutionised the way consumers spend, disrupting the entire retail sector and elevating some platforms to the ranks of the largest companies in the world.

17% of goods projected

to be bought online in 2021, nearly doubling from 2016. In 2020, goods bought online globally grew by 24% while stored-based sales declined by 7%

Source: Euromonitor

Cloud Computing

The cloud is tapping into massive swathes of our economy and society, affecting how we use many of the fundamentals of everyday life.

70% of organisations

using the cloud plan to increase their spending here in the wake of COVID-19. 18% increase in spending projected in 2021 to $304.9 bn, up from $257.5 bn last year.

Source: Gartner

Cloud Computing
Cyber Security

Cybersecurity

The dramatic increase in remote working globally in 2020 has contributed to the acceleration of global spend on Cybersecurity.

12% CAGR(*) for the 2021-2028 period

for the Cybersecurity market, which is projected to grow from $165.8bn in 2021, to $366.1 in 2028.

Source: Fortune Business Insights

(*) Compound Annual Growth Rate

Blockchain

With Blockchain we have only just scratched the surface of its capabilities. Our conviction in the legitimacy of the Blockchain revolution is based on its potential impact across industries and society.

$3 trillion

in annual business value by 2030 generated by blockchain, with over $175 billion by 2025.

Source: Gartner

Blockhain
5G

5G

The next generation of wireless connectivity has arrived. 5G is more than just another technology innovation, but a platform for future innovation.

1.8 billion

5G connections by 2025 developed Asia and US will lead the way.

Source: GSMA Intelligence’s Mobile Economy 2020

Clean Energy

The continuing transition to clean energy is gaining widespread traction. The sheer scale of investment needed into renewables and the development of infrastructure is vast, with trillions of dollars required to meet climate goals.

Between $78 trillion and $130 trillion

required in new investment by 2050 to reduce emissions well below two degrees(*).

Source: BNEF

(*) The Paris Agreement is a legally binding international treaty on climate change. Its goal is to limit global warming to well below 2 degrees, preferably to 1.5 degrees, compared to pre-industrial levels

Clean Energy

What is disruptive tech?

Disruption alters the status quo. Disruptive technology represents those powerful forces that irrevocably alter our lives through technological innovations. To qualify as “disruptive”, a technological innovation, such as the smart phone, must completely overhaul or replace the process or processes that preceded it.

Selecting targeted and powerful investment themes which provide investors with new avenues for their investments.

Latest thinking

Turning our latest rigorous research into
insights and advice.

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16th March 2021
(Solar) Winds of Change

Learn how we believe the SolarWinds hack in December 2020 that affected 250 organisations, including the US government, can act as a positive catalyst for the cybersecurity industry
12th March 2021
Does Netflix have an inflation busting model?

With the spectre of inflation rising, could Netflix be an unexpected hedge? Learn more about how Netflix's subscription business model is tearing up trees in a digital way.
9th March 2021
Buffet's Big Best on 5G

Buffett seems "all in" on 5G - adding a substantial investment in Verizon to his earlier investment in T-Mobile and in Berkshire's largest holding - Apple. We take a look at his recent plays in the 5G space here.
1st March 2020
We are not in a bubble

With returns like that, many investors are askinh fear-driven questions and who could blame them, again #2020. A fear-driven question like "Has it gone too high?" can be flipped to "How high can it go?"