What do you mean by 'Thematic investing'?

• Thematic investing is the process of making investment decisions based on emerging themes. These themes are determined by looking at the intersections of shifting economics. Demographics, technologies, and regulatory mandates. It's based on trends and not on past performance or fundamentals of a company.

  Exchange Traded Funds are the closest thing to thematic investment. Thematic investment is more flexible than ETF's because the brokers, fund-manage and even a group are able to identify the companies that will invest in a particular theme.

  What is Thematic investing?

  • The broker suggests a set of themes that represent ideas, e.g. I would like to invest in Gujrat industries.
  • The broker will identify a list of companies that match the theme. Each theme can include a number of stocks.
  • Investors choose a theme to invest in and then decide what they want to do with it.
  • The broker will invest the money into the individual stocks that correspond to the theme of the proposition.

  Example:

  • Theme: Muthoot Company Group
  • Stocks on this theme:
    • Muthoot Finance Limited, 50%
    • Muthoot Cap Serv Ltd – 50%

  When a customer invests in this topic, half of the money is invested in two stocks.