Watch out for thematic funds’ risks – high closure rate and poor performance
The growth proposition of such funds is not borne out in returns against a global equities benchmark, suggesting that the odds of picking one that outperforms global equities over longer periods are firmly stacked against investors
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THEMATIC funds exert a certain magnetism. Fund names alone – such as robotics, artificial intelligence and energy transition – immediately signal the exposures you will get.
They are also easy to market when market sentiment is bullish, as it is now.
But there are many reasons to be cautious. Sharply higher volatility is one. Other cautionary factors are less well known, however. Two stand out, and are highlighted in Morningstar’s report on the global thematic landscape in 2024.
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