Can you tell what a thematic ETF is?


In the world of investments there are many types of financial products in which you can put your money. This is something you probably know if you have some contact with investment, and have even managed to have an investment portfolio that is more or less varied.

But there are many people today who are wondering what a thematic ETF is, because they have heard about it in some investment media, and it is a concept that is newer to them.

You may know what ETFs, or exchange-traded funds, are, and you may even have some knowledge about what some of the most important ETFs of recent times are, or how to invest in them to get a worthwhile return. But the thematic ETF is something much more specific, and today we are going to tell you more about it so that it is clear to you what it is and so that you know whether you would like to include it in your investment portfolio or not.

Let’s get on with it, so keep reading the article!

The following is the best definition of a thematic ETF

A thematic ETF is, to begin simply, a type of financial product. This means that it is a place where a person can deposit a part of his savings in order to put them to work and make a financial return on them.

And being a little more specific, a thematic ETF is a product that focuses more specifically on a particular theme or market niche. Normally these are niches that, for different reasons, are having a special boom at a social level and promise that capitalizing on it, is going to be a good decision.

It could be said, therefore, that ETFs are the trend-related investment, and that if a person has a good eye and a facility for analyzing the events around him, he will probably be able to make quite a lot of money with this type of financial product.

Although later we will tell you in more detail what are some of the most demanded thematic ETFs today, in order to clarify the definition and exactly what they are, we are going to tell you for example about the boom that has occurred with technology. This in the last ten years, but especially in the last three following the pandemic and the need for our non-contact communications to improve. Well, in connection with this trend towards all things technological, out of that have come some thematic ETFs such as artificial intelligence, which are going to become not only a breakthrough but a very profitable niche market.

How are thematic ETFs taken into account in today’s market?

Finance and investments are constantly and rapidly changing, so there are times when certain products suddenly become the topic everyone is talking about. This is exactly what has happened with thematic ETFs, whose investment has grown exponentially in recent years.

Especially related to the world of technology, we can talk about the fact that in the next five years investment in artificial intelligence, to give the same example of the thematic ETF we were talking about earlier, is expected to grow a hundred times more. In more concrete data, from the investment of 27 million dollars that there was in this field in 2019, to what is considered to happen in 202, which is a figure of 267 billion dollars.

So, as you can see, having enough information at the right time about some specific trends can make investing in thematic ETFs a good idea, and by being very clear about the growth trend of something, the investment risk is reduced.

Some examples of thematic ETFs you should know about

We have already given you the example of the artificial intelligence thematic ETF, but I am sure you would like to hear some other examples so that you already have a fixed idea of what type of product this is, and why you should be interested in it.

A thematic ETF is one that can arise from any theme that is trending. So, if you look around us a little bit, we could obviously say that there will be a lot of thematic ETFs related to sustainability. It is one of the most talked-about topics, and the trend is clear for the coming years: taking care of the plant is becoming a priority, and all companies and markets are going to act based on it. To give a more concrete example, the electric car market is a thematic ETF that is also the talk of the town.

If you are interested in investing in different products to diversify your portfolio, perhaps the thematic ETFs would fit into this new idea. However, it is important to have enough information about them, to read well about the products in which you have decided to invest and to do it carefully, especially at the beginning, so as not to risk too much and lose everything.

In another article we are going to talk to you more specifically about how to invest in the world of thematic ETFs, so pay attention because there you can learn how to make it not such a risky product, and become enormously profitable.

Thanks so much for reading, see you in the next post!

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